Turning My Hobby Into A Business, Are There Tax Benefits?

You started out designing t-shirts for a family reunion. Before you knew it, requests for other designs were trickling in. Does this sound familiar?

Maybe it isn’t graphic design. Perhaps it’s dog walking, babysitting, reselling, or crafting. If you’re like most people, you have a hobby you love and are really good at. A growing number of Americans are turning their hobbies into hustles, with nearly 4 out of 10 Americans working side gigs.

When your hobby starts to pull in income, it’s important to consider the tax implications. You may find it best to transition from hobbyist to entrepreneur to receive any tax benefits as your hobby income increases.

Here’s everything you need to know to start weighing the pros and cons of turning your hobby into a business from a tax perspective.

Hobby or Business Questions to Consider

Is it a hobby? Is it a business? Often, the answer is both! However, when it comes to your taxes, you’ll have to make a decision. It might surprise you, but income isn’t the determining factor here. Your hobbies can make you money.

Before the 2017 Tax Cuts and Jobs Act, it was possible for a hobbyist to deduct expenses related to their hobby up to the amount of income from the…