Hobby Income Taxability

Yes, hobby income is taxable. You must report hobby income on your tax return, even though the activity is not engaged in for profit.

Reporting Requirements:

Hobby income (gross receipts minus cost of goods sold) must be reported on line 8j, Schedule 1 (Form 1040), Additional Income and Adjustments to Income [1]. If you sell hobby assets at a gain, report the capital gain on Form 8949 [1].

Expense Limitations:

While hobby income is taxable, hobby operating expenses are not deductible. The deductibility of miscellaneous itemized deductions subject to the 2% AGI limitation was permanently repealed for tax years after 2017, which includes hobby operating expenses [1]. Only cost of goods sold can offset hobby income [2].

Important Note:

Hobby income is not subject to self-employment tax, and losses from hobby activities cannot be used to offset other income [1]. Do not use Schedule C or Schedule F to report hobby income and expenses.