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

Other Income - 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).

If you are unsure if your activity is considered to be carried on for a profit, see the section titled Not-for-Profit Activities in Chapter 1 of IRS Publication 535 Business Expenses.

To enter the income from your hobby in TaxACT:

  1. From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab
  2. Click Other Income to expand the category and then click Prizes, Awards, or Other Miscellaneous Income
  3. The description and amount should be entered on the following screen using the top line(s)

 

To enter your expenses from your hobby in TaxACT:

  1. From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab
  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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