Per IRS Publication 17 Your Federal Income Tax For Individuals, page 94:

Activity not for profit.  You must include on your return income from an activity from which you do not expect to make a profit. An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Enter this income on Form 1040, Line 21. Deductions for expenses related to the activity are limited. They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). See Not-for-Profit Activities in Chapter 1 of IRS Publication 535 Business Expenses for information on whether an activity is considered carried on for a profit.

To enter the income from your hobby in TaxAct®:

  1. From within your TaxAct return (Online or Desktop), click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Other Income to expand the category and then click Prizes, Awards, or Other Miscellaneous Income
  3. Enter the amount in the field titled Hobby income

 

To enter your expenses from your hobby in TaxAct:

  1. From within your TaxAct return (Online or Desktop), click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Itemized or Standard Deductions to expand the category and then click Other Expenses Related to Taxable Income - Subject to 2% of AGI
  3. Click Continue once, then enter the amount in the field for Hobby expenses, limited to hobby income 

Once the entire itemized deductions section of the Q&A is completed, the program will use the higher of your itemized deductions or the standard deduction for your filing status to maximize the tax benefit to you.


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