Hobby income tax

jmaestro

How much would hobby income tax affect my tax return? For example, if I have about $16000 in hobby tax income from amazon vine, what are some ways that I could offset that or how much would it affect my tax return?

PhillipB

Hello,

The tough part about hobby income is that you have to report the entire amount of gross income from the hobby as part of adjusted gross income on your return. This has an effect on itemized deductions like medical expenses.

Before the Tax Cut and Jobs Act of 2017, hobby expenses were deductible as an itemized deduction, but they were repealed until 2025 under that tax law. Therefore you cannot deduct any of the hobby expenses.

The main thing you want to consider is whether the income is really from a hobby or whether you have a trade or business. If this is a trade or business, you can deduct all of your expenses related to the hobby and this would reduce the income tax on this activity. Granted, you would have self employment tax to consider (15.3 of the net income from the activity) but that might amount to a better tax benefit than claiming the activity is a hobby. See this article from the community for a good reference on how to be sure you have a hobby or a business: Do I have a business or a hobby?

Let us know if there are additional questions or concerns.

Thanks for using FreeTaxUSA

PhillipB Tax Pro Agent, FreeTaxUSA

jmaestro

so if for my federal, my AGI was about 110k last year and let’s say everything is the same and deductions about 44k, with the $16,000 hobby income, approximately how much will my tax return differ? I received about $7,700 back.

PhillipB

Very roughly, if you file married filing joint (MFJ) I have around 8,700 in tax, and if you file single I have you with a little less than 11,800 in taxes.

The amount of your refund depends on other factors, such as:

• Withheld taxes
• Tax credits
• Estimated tax payments