Question

Aiko enjoys painting in her free time. She recently started selling her artwork to friends and family, purely as a hobby and not to make a profit. How is the income from this activity reported on her tax return?
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

Answer: She will report the income on Schedule 1 (Form 1040), Part I, line 8 (the “Other income” line). The income is hobby (not-for-profit) income and is not subject to self‑employment tax.

Explanation: Because Aiko’s painting is a hobby (not carried on for profit), she does not use Schedule C. All proceeds are reported as “other income” on Schedule 1 and hobby expenses generally are not deductible (so you do not net expenses against that income).