Hobby or Business?

February 7th, 2017 → 11:08 am @ Carol

How do you know if you have a hobby or a business? There is not set dollar threshold that changes a hobby writer into a professional.

It depends primarily on your motivation for writing.

The IRS has a few factors to consider:

• The time and effort you spend in the activity can determine hobby status. Spending significant amounts of time writing might imply that your writing is more than a hobby and it is a business.
• The manner you conduct the activity such as doing advertising or bookkeeping may mean your hobby has become a business.
• Your expertise and prior success in a similar activity may cause your hobby to be classified as a business. An author with a publishing contract has a business, not a hobby.
• Your profit motive and prior history of profits may indicate a for-profit business, not a hobby.
• Other sources of income may demonstrate your writing is not your main source of income, but only a hobby.¹

Tags: author, hobby income, hobby writer, IRS, tax deduction