Business or Hobby? Do you know what the IRS uses to decide?

The IRS has a checklist to determine if a taxpayer’s activity is a business or a hobby. The results of that decision will impact the deductibility of certain expenses on your tax return.

The checklist includes

  • How many years have been profitable on the tax return,
  • Has the taxpayer taken steps to increase efficiencies and/or profitability of the activity,
  • Does the taxpayer depend on the income from the activity

If the IRS determines the activity is not a business then certain expenses can be deducted only on a Schedule A and others may not be deductible at all.

Click here for more information from the IRS [], or call us – we can help!