Timeline for What if Other Income approaches "self-employed"? Large "Other Income" amounts?
Current License: CC BY-SA 4.0
15 events
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| Jan 16, 2021 at 16:35 | comment | added | Fattie | I believe your second last comment there ("I think what...") in fact totally and completely resolves and answers the whole issue. Unreal. (Funnily enough I was even going to ask about the typically laser-accurate Harper's answer referenced!) | |
| Jan 16, 2021 at 15:51 | comment | added | Ben Miller | I would also say that it is inaccurate to say, as Craig W does, that "the default assumption is that it's a business." In order to allow business expenses to be deducted, the IRS wants the business to be run like an actual business. There are plenty of examples where the IRS has deemed that a taxpayer's activities are not a business and disallows business deductions/losses. It's not as if you are safe if you fill out a Schedule C and inviting an audit if you put it in "Other Income." | |
| Jan 16, 2021 at 15:47 | comment | added | Ben Miller | @Fattie I think what you are saying is accurate. It is common to say "business" vs. "hobby," and you'll even see this terminology used in some IRS documents, but it is really "business" vs. "activity not for profit" (not to be confused with a non-profit organization, which is something entirely different). This does trip people up sometimes, such as in Harper's well-meaning, but inaccurate answer on the other question. You can have an activity that most people would not consider a "hobby," but is also not a business. | |
| Jan 16, 2021 at 13:42 | comment | added | Fattie | That's certainly an interesting distinction. For the girl in question she got a fairly high payment but it's arguably not a business since, let's say, the project just fell in her lap and she does not, eg, spend time chasing clients etc. (Of course, any such intent thing - how do you use your home office etc - is naturally debatable. Indeed my impression is in regards Other Income, the IRS will phone you up and tell you to put it in Sched-C if they are pissy about it, which seems pretty harmless.) So indeed is that pretty much your interpretation, my two comments above? :O | |
| Jan 16, 2021 at 13:41 | comment | added | Fattie | .. but of course it's perfectly correct in practice. ie this "Hobby" language is just something introduced beyond the actual code which is commonly used to let us say summarize the code. So for example, you can imagine, similarly, someone saying "... if it's not serious". ie "not serious" or "hobby" is just being used to encapsulate the actual code (which is indeed, simply, is it a "business" or not). | |
| Jan 16, 2021 at 13:39 | comment | added | Fattie | Ahhh ...... is your interpretation this: "the distinction then for 'Other Income' is in fact the distinction discussed 'is it a business or not'. that the word 'hobby' is used occasionally in connection with 'business: not' is extraneous/irrelevant to the fact that the distinction in play for the 'Other Income' line is the 'is it a business or not' material from the IRS". Is that about right? Thus for example the first sentence of Craig's answer is "wrong" (the defining language at hand has nothing to do with "hobbies", Craig's sentence should read "..if it's a business or not') .. | |
| Jan 16, 2021 at 2:25 | history | edited | Ben Miller | CC BY-SA 4.0 |
Typo fix
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| Jan 15, 2021 at 22:51 | history | edited | Ben Miller | CC BY-SA 4.0 |
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| Jan 15, 2021 at 22:24 | comment | added | Ben Miller | @Fattie I have expanded my answer to address the new section of your question. | |
| Jan 15, 2021 at 22:23 | history | edited | Ben Miller | CC BY-SA 4.0 |
Expanded answer to address OP's references
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| Jan 15, 2021 at 21:25 | comment | added | Fattie | It's great that you have found the place which says that regarding hobby income, you should enter it on the "Other Income" slot ! That is "one direction" of the information dearth, if you see what I mean .. :O | |
| Jan 15, 2021 at 20:29 | history | edited | Ben Miller | CC BY-SA 4.0 |
Added more official references
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| Jan 15, 2021 at 20:18 | history | edited | Ben Miller | CC BY-SA 4.0 |
added link supporting claim
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| Jan 15, 2021 at 20:07 | history | edited | Ben Miller | CC BY-SA 4.0 |
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| Jan 15, 2021 at 19:57 | history | answered | Ben Miller | CC BY-SA 4.0 |