Hobby Vs. Business (Where's the Line?)

[Mr. Misha]

PayPal reports transactions to the IRS

Electronic payments are only reported if they're $20k or more or there's 200 electronic transactions or more.

In regards to income, all income made has to be reported to the IRS.

In the scenario of hobby income, you can deduct expenses UP TO the amount of your income. Meaning, you cannot have a loss. There's also limitations on different expenses but I won't get into that.

Also, you dont file a schedule C for hobby income/expenses. You'd report income as "Other income" on your 1040 return and deduct expenses on your schedule A. The problem with that is, if you don't itemize, you cannot deduct hobby expenses. And that's how the IRS gets you.




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