Is Your Teacher Side Hustle a Business or Hobby According to the IRS?

The Classroom Exit Strategies Podcast

How do we determine whether we have a business or hobby for tax purposes? Well, if you’re anything like me, you figured if you made any money...it was a business. While that is sort of true, there is more to it than just deciding you have a business.
In today’s episode, Janet Stelly, CPA, joins me and unpacks the nine critical factors the IRS considers when determining whether you’re running a business or a hobby before sharing the essential action steps you need to take NOW to ensure you’re leveraging all of your allowable tax exemptions.
According to the IRS, the goal of a business is to make money whereas the goal of a hobby is for recreation. In other words, while business owners are working to make money, hobbyists are just having fun. At first glance, that seems like a fairly insignificant difference, but there’s one crucial distinction between the two...tax exemptions.
If you have a hobby, you can still make money, but you can’t claim ANY expenses...every dime you make is taxable. However, if you run a business, you’re allowed to claim MULTIPLE exemptions for the things that are necessary to run your business from supplies to education...even if they’re the same things you would need for your hobby.
Suddenly, the difference becomes quite clear, and you can see just how important it is for you to be running your side hustle as a business and not as a hobby.
📝Click here for a transcript of this episode.

Links Mentioned in this Episode:

• Janet's Website - janetdanielstelly.com
• Janet's FB Group - Financial Insights for Small Businesses

🔥 To receive 40% off Janet’s course Financial Records: Organization & Documentation for Taxes, remember to use coupon code HTM40.

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