Pastime Activity: Business or Hobby?

The answer dictates how expenses are treated for tax purposes. Business expenses are usually fully deductible (there are limits in some cases), while hobby expenses are not. This is so even though all income from a hobby activity must be reported and can’t be netted against expenses. The IRS has tips to help determine whether a pastime is a business or a hobby. The bottom line is that a business is conducted for profit, but you have to prove it if an activity is challenged as a hobby. #IdeaoftheDay