In the capitalist society in which we find ourselves today, many people come up with the idea of taking advantage of their hobbies (activities that a person does because they enjoy it and without the intention of obtaining any benefit, especially monetary) to exploit and monetize them, so that they become a source of income, and that’s great! You better enjoy what you do. This almost always happens with the idea that if it is an activity that is enjoyable to do, then the process of receiving money in return will not be so burdensome or tiring. However, determining whether such a hobby is feasible to turn into a thriving business can be confusing, but it is important to know how to differentiate it for tax purposes – and how to deduct them!

According to the IRS, the big difference that exists between a hobby and a business activity is that the business operates in a way that earns financial gain, whereas a hobby is an activity that is undertaken purely for the pleasure or recreation of the person engaging in it.

To help clarify the process, the IRS sets out some of the factors that individuals can consider when planning to monetize their hobbies to determine whether it is feasible for it to become a lucrative business or whether it is better off remaining a mere hobby.