ljwalters Posted March 2, 2014 Report Posted March 2, 2014 Client says that he teaches drum lessons to young kids. He says it is a hobby. his only income. lives with parents. He made $8,000. Can it still be considered a hobby. Quote
Terry D EA Posted March 2, 2014 Report Posted March 2, 2014 I think that if he is charging for a service then it is definitely a business. Quote
kcjenkins Posted March 2, 2014 Report Posted March 2, 2014 Remind him that INCOME from hobbies is taxed, so since he's charging for his services, he's got to report it as SE taxable either way. Quote
ljwalters Posted March 2, 2014 Author Report Posted March 2, 2014 age 22, His real job is with the symphony Quote
7204 MEM Posted March 2, 2014 Report Posted March 2, 2014 Refer to Regulation section 1.183 - 2('b). It discusses several factors to use when determining if an activity is a hobby or a business. No one factor can make the determination. Occasional profits from hobby activities are not subject to SE tax and losses from hobby activities cannot be used to offset other income. Quote
KINGCHUCK1971 Posted March 2, 2014 Report Posted March 2, 2014 I think he's considered a self contractor and has to be reported on a Schedule C. Quote
kcjenkins Posted March 2, 2014 Report Posted March 2, 2014 Occasional profits from hobby activities are not subject to SE tax, but 7K in income, given normal teaching fees, means he's not doing this "Occasionally". Quote
ljwalters Posted March 3, 2014 Author Report Posted March 3, 2014 The money he spends on the practice studio would put him at a loss, Without his expenses it does seem high. Quote
Terry D EA Posted March 3, 2014 Report Posted March 3, 2014 If he is renting a studio then he is operating a business. Deduction of the expenses will reduce the SE tax due. Schedule C on this one all the way Quote
kcjenkins Posted March 3, 2014 Report Posted March 3, 2014 The money he spends on the practice studio would put him at a loss, Without his expenses it does seem high. WHOA..........Is he renting the studio just for the lessons he gives? Or renting it for his personal practicing as well as the lesson? It does not 'smell right' if he's got a loss because he;s renting space to give lessons, that costs more than he's charging for the lessons. 1 Quote
Pacun Posted March 4, 2014 Report Posted March 4, 2014 Client says that he teaches drum lessons to young kids. He says it is a hobby. his only income. lives with parents. He made $8,000. Can it still be considered a hobby. It is a hobby and that will be a more conservative approach. Why don't you just leave it at a hobby? I believe the IRS cares more when people are having hobbies and filing as businesses. In this case, it is the other way around and the IRS will never care. Quote
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