Other Income
Imagine this. By day, you’re a software engineer. By night? You’re an author on a mission to publish the next great American novel.
You take writing seriously. It’s your side business. But the IRS isn’t so sure…
Hobby activities are a source of income for many taxpayers. As a reminder, this income must be reported on tax returns. But the reporting rules are different than for income from a for-profit business. For one thing, hobbyists can’t deduct their hobby expenses.
If you enjoy collecting antiques and collectibles or investing in fine art, wine, or vintage cars, there may be a time when you’re ready to cash in and reap the financial rewards. But you need to be aware of the tax impact of selling collectibles.
Special tax rules may apply to some children who received investment income in 2022 or expect to receive it in 2023. Investment income generally includes interest, dividends, and capital gains. It also includes other unearned income, such as taxable scholarships or from a trust. These rules may affect the amount of tax and how to report the income.
