From this side hustle activity, are you claiming tax losses on your Form 1040? Will the IRS consider your side gig a business and allow your loss deductions?
The IRS likes to claim that money-losing sideline activities are hobbies
rather than businesses. The federal income tax rules for hobbies have been anti-taxpayer for years, and now an unfavorable change enacted in the Tax Cuts and Jobs Act (TCJA) made things even worse for 2018-2025.
If you have such an activity, we should have your attention.
Here’s the deal: if you can show a profit motive for your now-money-losing sideline activity, you can classify that activity as a business for tax purposes and deduct the losses.
We have a great blog post about the difference between a hobby and a business. If you would like a little more information on the topic, click here.
Would you like to discuss your side hustle, or some other tax topic? Click here to schedule an appointment with one of Gold Standard's seasoned tax accountants.
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