Schlotzhauer and West logo


1411 N Batavia Street, Suite 209

Orange, CA 92867


Phone: 714-695-9173

Fax:       714-695-9178



February 2021

Is Your Hobby a Business or Is Your Business a Hobby?

Everyone has hobbies and sometimes those hobbies provide some income. But when does your hobby become a business? Getting the right classification determines how this income is taxed.

Generally, if you engage in your hobby with the intent to generate profit, then it’s a business, not a hobby. And if your hobby is strictly for recreation or personal entertainment, it’s not a business. But many other criteria should be considered, including whether you rely on the income for your livelihood and how much time and effort you put in.

You must report all your hobby income on your tax return. However, following the 2017 Tax Cuts and Jobs Act, hobby expenses were eliminated and are no longer deductible on Schedule A as a miscellaneous itemized deduction.

However, unlike your hobby, if you’re operating a business, you can deduct all your business expenses even if it creates a taxable loss. And the upside is that if you generate a loss, it can usually be used to offset other income from things like wages or investment income.


Enter your Name and Email address to get
the newsletter delivered to your inbox every month.


Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.

The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.