No, tax reform makes deducting hobby expenses nearly impossible.

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Is This A Hobby Or A Business?

It’s important to know if the IRS classifies your activity as a hobby or a business. If your hobby is now a full-fledged business, you should take valuable business deductions.

Generally, the definition of business is a venture whose primary purpose is to make a profit. If your motive is not primarily for profit but rather, for fun, sport or recreation, it is considered a hobby.

If the IRS classifies it as a hobby, you can’t get the same set of deductions as a business. Still, you can often deduct some hobby expenses.

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Hobby Expense Deduction In The Past

Under the prior tax law, you could potentially deduct hobby expenses up to the amount your hobby made money. You’d treat those expenses as a miscellaneous itemized deduction that you could only deduct if it exceeded 2 percent of your AGI.

Tax reform removed this deduction.

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Manasa Reddigari

Manasa Reddigari

Manasa Reddigari is a freelance technical writer and small business owner whose insights have appeared in diverse digital publications. She has a passion for leveraging technology to reveal simple solutions for everyday business finance complexities. Visit www.scribmint.com to learn more about her work.
Manasa Reddigari

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