This article was published by the IRS.

Many people are engaged in hobby activities that are also a source of income. For example, some people started selling handmade items during the pandemic. These people must report this income on their tax return.

A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. This differs from those that operate a business with the intention of making a profit.

In determining whether their activity is a business or hobby, taxpayers must consider nine factors.

These factors are:

* Whether the activity is carried out in a businesslike manner and the taxpayer maintains complete and accurate books and records.

* Whether the time and effort the taxpayer puts into the activity show they intend to make it profitable.

* Whether they depend on income from the activity for their livelihood.

* Whether any losses are due to circumstances beyond the taxpayer's control or are normal for the startup phase of their type of business.

* Whether they change methods of operation to improve profitability.

* Whether the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business.

* Whether the taxpayer was successful in making a profit in similar activities in the past.

* Whether the activity makes a profit in some years and how much profit it makes.

* Whether the taxpayers can expect to make a future profit from the appreciation of the assets used in the activity.

If a taxpayer receives income from an activity that is carried on with no intention of making a profit, they must report the income they receive on Schedule 1, Form 1040, line 8.