Hobby Loss

A hobby loss is the amount of money you spend on a hobby minus any income you earn from it. If your hobby expenses are more than your hobby income, you can deduct the difference from your other income. However, there are some restrictions on what you can deduct.

**What is a hobby?**

A hobby is an activity you do for pleasure, not for profit. If you earn money from your hobby, it doesn't necessarily mean it's not a hobby. The IRS looks at a number of factors to determine whether an activity is a hobby or a business. These factors include:

* Whether you make a profit
* The time and effort you put into the activity
* Whether you intend to make a profit
* Whether you have the knowledge and experience to make a profit
* Whether you are able to sell your products or services

**How do I deduct hobby losses?**

If you have a hobby loss, you can deduct the amount of your losses from your other income. However, there are some restrictions on what you can deduct. You can only deduct hobby losses up to the amount of your other income. You can't carry your hobby losses forward to future years.

You can also only deduct hobby losses if you itemize your deductions. If you take the standard deduction, you can't deduct your hobby losses.

**What expenses can I deduct?**

You can deduct any expenses that are directly related to your hobby. This includes expenses like the cost of supplies, equipment, and travel. You can also deduct depreciation on your hobby equipment.

You can't deduct expenses that are not directly related to your hobby. This includes expenses like your home mortgage interest, property taxes, and insurance.

**How do I report my hobby losses?**

If you have a hobby loss, you must report it on Schedule C of your Form 1040. You must also attach Form 8919 to your return.

Form 8919 is used to calculate the amount of your hobby loss that you can deduct. You must first calculate your total hobby income. This includes any money you earn from your hobby, as well as any money you receive from grants, awards, or prizes.

You must then subtract your total hobby expenses from your total hobby income. This will give you your net hobby income.

If your net hobby income is negative, you can deduct the amount of your loss from your other income. However, you can only deduct the amount of your loss up to the amount of your other income.

You can't carry your hobby losses forward to future years.