Question

Celine loves to spend her free time quilting. She recently decided to start selling her handmade baby blankets to friends and family. She does this for recreation, not to make a profit. How will Celine report the income from this activity?
She does not report the income since it is not considered a for-profit business.
She will report the income in excess of expenses on Schedule 1 (Form 1040), Part I, line 8z.
She will report the income on Schedule 1 (Form 1040), Part I, line 8j. The income won’t be subject to self-employment tax.
She will report the income as gross income on Part I of Schedule C (Form 1040).

Answer 1

Correct answer: She will report the income on Schedule 1 (Form 1040), Part I, as “Other income” (i.e., the Schedule 1 other income line). The receipts are taxable but are not reported on Schedule C and are not subject to self‑employment tax. (Hobby expenses generally cannot be deducted against that income under current law.)