Question

Marissa is a talented knitter and decides to turn her hobby into a business. Marissa is successful and generates $8,900 worth of income while incurring $3,245 worth of hobby expenses. Is Marissa able to deduct her hobby expenses in 2018? Why or why not?

Answer 1

Marissa's hobby has turned into business. In this case the expenses incurred for pursuing her hobby can only be dedcucted from the income that she has generated from pursuing this hobby.

Yes she can deduct the expenses , that is worth of $3,245, as it is less than the income that she has earned from this. here the expense is less than the income earned, so it can be deducted from other income.

As marissa has turned hobby into business, she should also pay taxes on the income earned from this hobby, she should proviude records claimimg that she has been making a profit since the past 3 out of 5 years.