Question by Jan2001: If you earn a little extra money on the side, what qualifies as self-employment and what is simply a “hobby”?
I have had a small self-employment online business, but I am shrinking it down. I never earned as much money as I hoped, and I am tired of keeping track of expenses and earnings for income tax. Is there a dollar amount at which this would no longer be considered self-employment but simply a hobby? I like helping people (life coaching) but I am reaching retirement age, and would just like to maintain my three existing clients and forget about the “business” aspect. Is there any way to do this?
Best answer:
Answer by tro
there is no minimum or maximum, if you perform services for someone else it is a business and reportable
if your Sch C net is $ 400 or less you do not have to pay se tax on it
apparently you do make something at this
IRS takes the stand that when someone has a little side business but it never makes any money, they then consider it a hobby and disallow the expenses
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