Hobby Income

[Chief]

I have a client who is a nurse but has 1200 hobby music income from singing at shopping malls. My software figures self-employmentt for this income. Should I over ride this an have no self employment tax. She has two l099misc statements. Her total income is well over 50,000 dollars.

[Joe Btfsplk]

I would say self-employment

It requires her to do something to earn the money, so it would not be a prize or award, investment income, passive income or any other type income other than earned income and social security and medicare are due on all earned income.
There is nothing that says a hobby is by definition not a business. The only rule is that hobby losses are not deductible, but all related expenses up to the amount of the income are deductible.

[Chief]

Thanks, Joe

Thanks for clearing that up for me. You're right and I checked it as earned income on the return. I keep learning something every year. Last year I had done it right but had forgotten why. Ah old age I guess.

[skhyatt]

Maybe not subject to

There is some info on Self-Employment tax on TTB 5-23. One quote there is: "The courts have ruled that an activity subject to SE tax must be regular and continuous." There is other info there on 5-23, but just to keep in mind that the income from singing in this case may not be subject to SE tax. Facts and cirmcumstances determine if it is an activity of trade or business.

[Gary]

Hobby Expenses

Hobby expenses are reported on Schedule A, and most expenses go on miscellaneous deductions subject to 2%.

Gary

[Chief]

Income Subject to SE Tax

Thanks fellows. In this case I will explain the circumstances to my client and let him decide what to do. My recommendation will be that he not become a test case with a large refund involved. Even my software will have to be over ridden if he decides to take that position. It is not worth it.

[qwerty]

Hobby status???

I have a client who is a nurse but has 1200 hobby music income from singing at shopping malls. My software figures self-employmentt for this income. Should I over ride this an have no self employment tax. She has two l099misc statements. Her total income is well over 50,000 dollars.

Recently I represented a client for audit and the revenue officer attempted to claim her business as hobby by placing the income on line 21 and then the expenses on Sch.A subject to 2%. I successfully argued that her activities were and are intended as a business and intended to generate an income. I did win my position.

Based on this...if your client already has $50K in income then I would say that this hobby income (gross) goes on the line for "Other Income" on Form 1040, page 1 and any expenses go on the Sch. A in miscellaneous expenses subject to 2% of AGI.

After all...your original statement said that she does this as a hobby. And...hobbies don't generate SE taxation as businesses do, at least in my humble opinion over the many years.

[Black Bart]

Hobby Cat

I occasionally sing "Singing in the Rain" while taking a shower and my wife "tips" me if I "shut up." Do you think it would be permissable for me to claim soap and shampoo expenses in Schedule A?

If not, then would choosing a "government" tune instead such as, say, "Battle Hymn of the Republic," affect the nature and character of the circumstances -- thus rendering the supplies deductible?

Serious responses only, please.

P.S. Never mind about the SE -- it's under $400 and besides, the tip could only be classified as a "bartering with Bart" exchange.

[jainen]

Battle Hymm

>>Serious responses only, please.<<

Isn't "Battle Hymm of the Republic" rather a --pardon the expression, I calls 'em like I sees 'em -- Yankee tune?

[Black Bart]

Hooray!

>>Serious responses only, please.<<

Isn't "Battle Hymm of the Republic" rather a --pardon the expression, I calls 'em like I sees 'em -- Yankee tune?

A response! And I thought you were never speaking again -- thank you, thank you, thank you (I feel like Trotsky being welcomed back into the Party).

And now; in re BHR: Yes, it's true, technically speaking, it was once considered a Yankee tune, but so what? We do what we have to do for a dollar.

On the other hand, there's another technical issue about which I must, in all good conscience, come clean. It has been discovered that the Bart clan which moved to Arkansas around 1910, did not emigrate from the state of Virginia as previously thought, but rather from West Virginia which seceded from the Virginia seceshers and joined the Union at the onset of the Civil War. This d***ning fact, apparently, makes my ancestors -- (gasp) Yankees.

I'm considering several "solutions:"
a. suicide
b. seclusion
c. strong drink
d. shut up about it

What hath God wrought? -- ALEXANDER GRAHAM BELL.

[oceanlovin'ea]

Why not Sch. C?

She makes money singing. It is a second job. Why wouldn't you want to put it on a schedule C and be able to deduct expenses?

That is what I think I would do. I have a man who is part of a band. They perform at some local pubs and do a few concerts around the holidays. I have considered it a secondary form of employment or income.

Lots of people work two jobs. Even if it is a more seasonal thing she does, she must do it regularly or every year at that time.

Linda F