"Hobby vs. Business: What’s The Difference?

Let’s start with the basics: For tax purposes, a hobby is defined as an activity that you engage in “for sport or recreation, not to make a profit.” Even if you earn occasional income from doing such an activity, the primary purpose must be something other than making a profit. Now, that “other” is not clearly defined, but consider that under IRS scrutiny, your hobby pursuits should be about leisure and recreation and not specifically making a profit.

To distinguish between a hobby and a business, you must take into account all the facts and circumstances of your situation. The IRS lays out the following 9 factors that should be considered when establishing if an activity is a business engaged in making a profit:"

• Hobby vs. Business: What’s The Difference? Retrieved from Hobby Income: IRS Hobby Income Limit & Loss Rules - IRS.com  on February 2, 2025, 8:31 PM EST. This product uses data/information from the IRS but is not endorsed by the IRS. The IRS  cannot vouch for the data or analyses derived from these data after the data have been retrieved from the Agency's website(s).

John Thomas Winskas 

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