Among many ongoing projects here at KDX I am exploring possible ways of monetizing my hobby operation without becoming an actual business. We have noticed that some hobby groups, like model train buffs for example, hold fund raisers which tells us that at least hobby groups can raise money.
So we wonder, when hobbyists have cash from fund raising, will banks allow checking accounts and credit cards to be opened in the name of the hobbyist? The next time I talk to a banker I intend to ask about it.
That all leads to wondering if hobby persons or organizations with cash are taxed? Already I have perused IRS pamphlets and booklets and found no mention whatsoever of hobby or hobbyists, although it is very interesting that the IRS requires thieves, robbers, crooks who obtain money illegally, must report their ill-begotten income. The next time I converse with my attorney I will ask what he has to say.
This matter is low on the priority list as many other projects compete for time and attention, so it may be awhile before there is more to report. If you have input it is most welcome.
@richardpowers That's probably a question for The Hobby Manufacturers Association (HMA) - said by Rich Powers
That opens an interesting discussion. Of course the HMA is not a hobby, and I will venture a guess as to what it is... It is likely a professional membership organization representing commercial businesses that manufacture the physical items utilized by hobbyists, eg., model trains or part 15 transmitters. That means the HMA is probably a not-for-profit entity registered with secretaries of state and the IRS. Because the HMA does not represent hobbyists per se they likely cannot answer questions about the legal status of hobbyists.
@carl-blare Technically any money that's income from any source has to be reported, including money you make from a part 15 station. That goes along with income from all sources. If you profit from it you are in business.
But realistically, well, I don't think the IRA or CRA even knows what part 15/BETS is. I think the IRS should make the billionaires pay their fair share not worry about the few bucks a hobbyist may make on the side. If you hire a kid/neighbour to cut your grass or shovel the snow and you pay him/her, do you think they declare the income? Yeah right.
My guess is that if you are making money from a hobby, it's income and taxable. You could be making thousands $$ a year!
@mark Thing is, you and the hobby are different entities. Any money donated to the hobby would not be income to you personally, especially if the hobby had its own bank account. You would be a trustee of the hobby account and keep separate ledgers. Probably a not-for-profit principle would apply, meaning that the hobby's funds could only be used for hobby activities.
@mark Thing is, you and the hobby are different entities. Any money donated to the hobby would not be income to you personally, especially if the hobby had its own bank account. You would be a trustee of the hobby account and keep separate ledgers. Probably a not-for-profit principle would apply, meaning that the hobby's funds could only be used for hobby activities.
That's exactly the way the IBS operated.
@richardpowers IBS:: Irritable bowel syndrome?
@carl-blare Thought I mentioned it often enough, The Intercollegiate Broadcasting System (IBS), the first legal unlicensed broadcastee organization --Actually, I guess, the only one ever..
@richardpowers IBS:: Irritable bowel syndrome?
LOL Carl. We have a local chain of cheesesteak shops called IB's. My friends think I'm a bit weird for not wanting to eat at a place whose initials stand for irritable bowel syndrome. Thanks to you and Rich, I feel vindicated!
As for the taxation question IIRC, in the US, any 1099 (freelance) income over $600 annually has to be reported. Pretty sure that whether it's called hobby income or not is a moot point to the IRS. Calling you and the hobby separate entities sounds like a dodgy workaround to me, but to each their own.