If you take tax deductions for any activity that is not your full-time job, you need to meet certain criteria to ensure the IRS does not consider your activity a hobby rather than a for-profit business. The IRS has nine factors they consider when determining if your activity is a hobby or a viable business. For more information on these factors, read this week’s C.P.A. Insight.
As a taxpayer, you are obligated to keep records to substantiate your deductions and tax basis.