Tax time in the USA & Custom Pony Sales

[Maniah]

So.. yeah.. It's tax time.. And while this won't affect me this year, it may in the future..

You are supposed to claim all earned income on your taxes.. Does selling custom ponies count? Do you claim what you earn? How do you handle it? Do you just ignore it? Do you only pay attention after a certain dollar amount?

I normally file 1040 EZ, but I'm wondering if I will need to go itemized if I make over a certain amount on sales. I really don't want to have to track business costs to do this.. Before, I just ignored pony sales on my taxes.. But that was small change.. talking maybe $60 earned in a year. But coming back to the hobby this year, I'm already sitting at around $300 earned, (and probably more than that spent).

Any advice would be very appreciated. Thank you very much.

[JessicaAFM]

I used to be a professional tax preparer and the local office manager for a national chain but it has been a while so you might want to double check with your current adviser. The general rule is that when you go from it being a loss to being a gain 3 out of 5 years, it goes from hobby income to self employed income. Hobby income can go on the other income line on your tax form, no extra forms. Self employment entails a schedule c and possibly others. All depends on what you make. I would suggest you start recording supply costs, dates of sales transactions, how much you made, etc at the very least to gauge how much you are making or losing. Then you can go from there.

[Maniah]

Say it is a hobby income, but you constantly report net loss. Do you then just report nothing? Or do you report the loss somehow?

[JessicaAFM]

No need to report if it is a loss. Hobby losses aren't deductible. If the IRS decided to hound you though, it would be handy to have a notebook showing that you maintained loss records. Know what I mean?

[Maniah]

Yeah. Thank you so much for the advice. I hate to do the work, but I would hate even more to get audited >.< I suppose this could be viewed as a good problem to have, in a way.