The Bottom Line
If you made money from a hobby — prints sold online, commission work, photography licensing, anything along those lines — it’s taxable income. That’s the short answer.
What trips people up is the how: the income doesn’t go on the same form as business income, the full amount received is what gets reported (not just what was left after expenses), and it flows into the part of the return that can quietly affect other things.
None of that is as complicated as it sounds. Here’s where it goes and what it means.
Not sure whether your activity is a hobby or a business? The instructions below apply to activities the IRS classifies as hobbies under IRC §183. If your activity has shown a net profit in 3 or more of the last 5 consecutive tax years, the IRS may treat it as a business — and the correct form is Schedule C, not Schedule 1. See Hobby Income vs. Business Income to confirm which path applies before using this guide.
Where Hobby Income Goes on a Return
Here’s the part most people get wrong before they look it up: the full amount received is what gets reported — not the profit, not the amount left after expenses. Under current TCJA rules, hobby expenses aren’t deductible, so there’s no step where costs come off before reporting. Whatever came in is what goes on the return.
That amount belongs on Schedule 1, Line 8z, labeled as “Other Income.” Schedule 1 is attached to Form 1040 and is where income that doesn’t have its own dedicated form line ends up — hobby income included.
From there, it flows directly into Adjusted Gross Income. That’s worth knowing because a higher AGI can quietly reduce certain credits and deductions that phase out based on income — so hobby income doesn’t just affect what’s owed on the activity itself.
What That Looks Like with Real Numbers
Example — Priya’s Photography Prints
Priya has been selling fine art photography prints online for two years — a mix of landscape and architecture work she licenses through her own storefront. The activity is a genuine passion project; she’s not running it like a business.
Her numbers for the year:
- Gross revenue: $3,200 (payments received through her storefront)
- Expenses (printing, framing, shipping materials, website): $1,400
- Net: $1,800
Because the IRS classifies Priya’s photography as a hobby, here’s how it flows:
Amount Where it goes Gross revenue $3,200 Schedule 1, Line 8z — full amount Expenses $1,400 Not deductible under current TCJA rules Added to AGI $3,200 Not $1,800 — the gross, not the net Priya’s hobby printing added $3,200 to her Adjusted Gross Income, not $1,800. The $1,400 she spent on the activity can’t come off anywhere on a current-law individual return.
The exact tax impact depends on Priya’s full income, bracket, filing status, and state rules.
What Happens When a 1099 Arrives
Payment platforms and clients sometimes issue a 1099-K or 1099-NEC for hobby-related payments when certain thresholds are met under current IRS rules. The form documents what was paid — it doesn’t determine whether the income is a hobby or a business.
What it does create is a matching record: the IRS receives a copy of the same 1099, and income that shows on a 1099 but not on a return triggers an automated underreporting check.
A note on 1099-K amounts: A 1099-K from an online platform may include shipping reimbursements, platform-collected sales tax, or refunds. IRS guidance allows filers to report an adjusted amount using a supporting statement that accounts for these items — only the income attributable to the hobby activity itself belongs on Line 8z. The supporting documentation is worth retaining in case of questions later.
For the full picture on how 1099 forms interact with hobby income: Hobby Income and the 1099-K.
Why This Doesn’t Go on Schedule C
Schedule C is for business income — and it comes with expense deductions, but also self-employment tax. Hobby income doesn’t qualify for either. Filing hobby income on Schedule C when the activity doesn’t meet the business threshold is a misclassification, and one the IRS’s matching system is built to flag.
Which form applies isn’t a filing choice — it follows from how the activity is classified before the return is filed. For a full breakdown of what changes under each path: Hobby Income vs. Business Income.
A Note on State Returns
This page covers federal filing only. Most states with an income tax follow the federal treatment — hobby income reported on Schedule 1 flows into state taxable income as ordinary income. Some states did not conform to TCJA’s suspension of miscellaneous itemized deductions and may still allow hobby expense deductions on the state return. Check your state’s tax agency website for state-specific rules. States with no income tax (Wyoming, Texas, Florida, Nevada, and others) have no state-level hobby income filing obligation.
Knowledge Check — Reporting Hobby Income
Question 1: Priya earned $3,200 from hobby photography and spent $1,400 on related expenses. How much does she report on Schedule 1, Line 8z under current TCJA rules?
- A) $1,800 — the net amount after deducting expenses
- B) $3,200 — the full gross amount, because hobby expenses are not deductible
- C) $0 — hobby income under $5,000 is not reportable
Show answer
B. Hobby expenses are not deductible under current TCJA rules, so the full $3,200 in gross revenue is reported on Schedule 1, Line 8z. The $1,400 in expenses doesn’t come off anywhere on a current-law individual return.
Question 2: A filer received a 1099-K from an online platform for hobby income. The 1099-K total includes $200 in shipping reimbursements paid by customers. What amount belongs on Schedule 1, Line 8z?
- A) The full 1099-K amount, including the $200 in shipping
- B) The 1099-K amount minus the $200 in shipping reimbursements, with a supporting statement
- C) $0 — a 1099-K automatically reclassifies the income as business income
Show answer
B. IRS guidance allows filers to adjust a 1099-K amount for items like shipping reimbursements, platform-collected sales tax, and refunds using a supporting statement attached to the return. Only the income attributable to the hobby activity itself belongs on Line 8z — not reimbursed costs that passed through the platform.
How the IRS Reviews Hobby Income Returns
The IRS matches 1099s issued by platforms and clients against what filers report on their returns. When the numbers don’t line up, the IRS sends a CP2000 notice — a formal discrepancy notice that proposes changes to the return and asks for a response. It’s not an audit, but it does require a written reply.
For hobby income specifically, consistent reporting on Schedule 1 over multiple years doesn’t typically draw additional scrutiny on its own. What attracts more attention is the reverse: activities reported on Schedule C with repeated losses and strong personal enjoyment elements — which is where §183 reviews tend to focus.
Related Articles
- Hobby Income: What It Is, How It’s Taxed — income tax, SE tax, and TCJA rules
- Hobby Income vs. Business Income — how the classification affects the return
- Hobby Tax Write-Offs: What Is and Isn’t Deductible — what the TCJA changed
- Hobby Income and the 1099-K — how 1099 forms interact with hobby income
- The Hobby Loss Rule Explained — the full §183 classification test
This article is for general informational purposes only and does not constitute legal or tax advice. Consult a licensed CPA or tax attorney for guidance specific to your situation.