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hobby income self employment tax
I have a hobby that I make money from…how do I pay taxes on that?
It makes me about $24-30,000 a year….about a third of that goes back into the hobby…supplies, shipping…etc…
I want to pay taxes but I am so lost about how to do that…by law do I HAVE to consider this a business? Does that mean I have to get licenses, zone my studio, do quarterly estimates….? I also heard that I have to pay self employment tax, with income and sales tax…which I think pretty much takes all the money that I make…which makes this not very profitable and more of a waste of time…
I do visual art…apart from my day job.
You’ll show the income and associated deductible expenses on a schedule C or C-EZ, and use a schedule SE to calculate your self-employment tax.
You don’t have to consider it a business, but you still owe tax on it whether it’s a hobby or a business if you are making money from it. No, you don’t have to get licenses or zone your studio. If you’re going to owe over $1000 for the year, which you will if you’re making that much, you need to either increase your withholding at your day job to cover what you’ll owe, or else make quarterly estimated payments.
Taxes and expenses aren’t going to take anywhere near all you make from this hobby, although they will make a substantial dent it it.
vb would be right about the amount going on your return as misc income if you didn’t expect to make a profit from it. But if you are netting $16K-$20K a year from it, you’d be hard pressed to claim to the IRS auditor that you didn’t expect to make a profit from it.
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The Beginnings of the New York Central Railroad: A History, … |