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?
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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