How do I report income from my glassblowing hobby and eBay reselling on taxes? (1099-K questions)
Hey everyone, I've always had an accountant do my taxes in the past, but I'm trying FreeTaxUSA this year to save some money. My situation has gotten a bit more complicated and I want to make sure I understand how to handle the income reporting correctly. I've started getting more serious about my glassblowing hobby, and I think I might make some decent side cash from it this year. I'm looking at possibly making around $2300 from selling pieces to friends and family. My costs would be roughly $450 for studio time rental, $250 for glass materials, and about $175 in gas money driving to and from the studio. That's like $875 in expenses with a profit around $1425. I'm also planning to sell some stuff that's been collecting dust in my basement. I have this old arcade cabinet I bought for $1800 a few years back, but I'd probably only get like $600 for it now since it needs some work. What I'm confused about is how to report all this on my taxes. Do I need to report the total income ($2300) from glassblowing or just the profit ($1425)? And what about the expenses - can I deduct those somewhere? For the arcade machine, do I need to report the sale even though I'm selling it at a loss? Also, I'm curious if anything changes if I don't have regular W-2 income in a year but do have some stock sales (1099-B). Does that affect how I report hobby or resale income? Thanks for any help! I'm trying to get ahead of this before I actually start making/selling stuff.
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Zoe Gonzalez
The key distinction here is between hobby income and selling personal items. They're treated differently for tax purposes. For your glassblowing hobby: You must report the full $2300 as income. Before 2018, you could deduct hobby expenses as miscellaneous itemized deductions, but the Tax Cuts and Jobs Act eliminated those deductions. Unfortunately, this means you'd pay tax on the full $2300 even though you have expenses. However, if your glassblowing activity qualifies as a business rather than a hobby, you can report it on Schedule C. Then you'd report the $2300 as income AND deduct the $875 in expenses, paying tax only on the $1425 profit. The IRS considers an activity a business if you pursue it with continuity and regularity and your primary purpose is income or profit. For the arcade machine: This is considered selling a personal item. If you sell it for less than you paid (a loss), you don't need to report it at all. The IRS doesn't allow deductions for personal losses. You'd only report it if you sold it for more than you paid. Regarding your bonus question: The tax treatment of hobby income or personal item sales doesn't change based on whether you have W-2 or 1099-B income. These different types of income are reported in different sections of your tax return.
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Avery Flores
•Thanks for the detailed explanation! So if I want to deduct my expenses, I'd need to treat the glassblowing as a business rather than a hobby? What's the threshold for the IRS to consider something a business vs. a hobby? Is it just about intent to make profit, or are there specific requirements like making a certain amount of money or filing specific paperwork?
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Zoe Gonzalez
•There's no specific income threshold that automatically makes an activity a business versus a hobby. The IRS looks at several factors: whether you conduct the activity in a businesslike manner, the time and effort you put in, your expertise, your success in similar activities, your history of income or losses, and your financial status. A good practice is to keep detailed records, open a separate bank account, create business cards or a website, and work consistently to improve profitability. Even if you're not profitable immediately, showing that you're trying to make money (rather than just having fun) helps establish business intent. You don't need to file special paperwork to be considered a business - you'd just file Schedule C with your tax return.
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Ashley Adams
After dealing with a similar situation last year, I found an incredible tool called taxr.ai (https://taxr.ai) that helped me figure out exactly how to report my side hustle income. I make jewelry and was confused about whether to report it as a hobby or business. The site analyzed my specific situation and clearly showed me that I qualified as a business based on my consistent production schedule and marketing efforts, even though my profits were modest. This meant I could actually deduct all my expenses on Schedule C! It saved me nearly $600 compared to reporting everything as hobby income. For your glassblowing, taxr.ai could help determine if you qualify as a business (sounds like you might), which would let you deduct studio rental, materials, and even mileage. And for your arcade machine sale, it confirmed for me that personal items sold at a loss don't need reporting. The best part was it explained exactly where everything goes on the tax forms and gave me documentation to support my filing decisions in case of questions.
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Alexis Robinson
•How does that work exactly? Do you just upload your information and it tells you what to do? My situation is kinda similar but with woodworking instead of glass. I made about $3k last year selling cutting boards and small furniture pieces but spent almost $2k on wood, tools, and booth fees at craft shows.
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Aaron Lee
•Sounds interesting but I'm skeptical. How is this different from just googling the information or asking in a forum like this? And what happens if you get audited and the IRS disagrees with whatever this tool told you to do?
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Ashley Adams
•You provide details about your income sources, expenses, and activities, and it analyzes everything based on current tax law. It asks specific questions about how regularly you work on your craft, if you have business cards, keep separate records, etc. - all the factors the IRS looks at. For your woodworking, it would likely identify that as a business based on what you've described, meaning you could legitimately deduct those $2k expenses on Schedule C instead of paying taxes on the full $3k. The tool would also help you categorize which expenses qualify for which deductions. The difference from just googling is it applies the actual IRS guidelines to your specific situation with much more precision than general advice. And it provides documentation explaining why your activity qualifies as a business based on IRS factors. If audited, you'd have this detailed analysis showing you made a good-faith effort to comply with tax law based on expert guidance.
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Alexis Robinson
I just tried taxr.ai for my woodworking side hustle, and wow, it was actually super helpful! It walked me through a series of questions about how I run my operation, and determined that I qualify as a business rather than a hobby. The analysis showed that even though I don't make a ton of profit yet, the fact that I keep separate records, have business cards, sell regularly at craft shows, and am working to grow my customer base makes it a legitimate business activity. This means I can file Schedule C and deduct all my material costs, tool purchases (depreciated), booth fees, and even mileage to shows. It saved me over $400 in taxes compared to reporting everything as hobby income! Plus it gave me a clear roadmap for what documentation I should keep going forward. For anyone confused about the hobby vs. business distinction, it's definitely worth checking out - much clearer than the generic advice I was finding elsewhere.
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Chloe Mitchell
If you're having trouble getting clear answers about your tax situation, I had a similar problem last year. Spent HOURS on hold with the IRS trying to figure out if my side gig qualified as a business or hobby. Nobody could ever get me a straight answer. I finally used a service called Claimyr (https://claimyr.com) that got me through to an IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent was super helpful and walked me through exactly how to report my vintage clothing reselling income. They confirmed I could treat it as a business since I was doing it regularly with the intent to make profit, even though I hadn't made much yet. This let me deduct all my inventory costs, shipping supplies, and even part of my home internet used for selling. For your glassblowing situation, getting official clarification directly from the IRS might be worth it since the hobby vs. business distinction makes such a big tax difference.
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Michael Adams
•Wait, how does this work? The IRS actually answers the phone when you call through this service? I've literally spent 3+ hours on hold multiple times and never got through. What's the catch?
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Aaron Lee
•This sounds like BS honestly. The IRS barely has enough staff to process returns, let alone give personalized tax advice over the phone. And even if you do get through, the person answering probably isn't qualified to give definitive answers about complex situations. You'd need a written determination letter to have any real protection.
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Chloe Mitchell
•The service basically keeps dialing and navigating the IRS phone tree for you. When they reach an agent, they call you and connect you directly. It works because they've figured out the best times to call and which options to select in the phone menu to get through faster. No catch - you just don't have to waste hours on hold. The IRS agents are usually very helpful once you actually reach them. For my situation, the agent explained that keeping good records of my intent to make a profit was key, even if I wasn't profitable right away. The person who answers can absolutely provide guidance on common tax situations like hobby vs. business distinctions. You're right that they can't give binding rulings on complex matters, but for straightforward questions like whether glassblowing can qualify as a business, they're perfectly capable of explaining the factors the IRS considers. It's not definitive legal protection, but it helps you understand how to properly file.
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Aaron Lee
I have to admit I was completely wrong about Claimyr. After my skeptical comment I decided to try it myself because I've been struggling with a 1099-K issue from PayPal reporting my personal item sales. The service connected me to an IRS representative in about 20 minutes (compared to my previous 2+ hour waits that ended in disconnection). The agent clarified that selling personal items at a loss doesn't create taxable income and explained exactly how to handle the 1099-K I received - basically that I should keep records showing my original purchase prices to demonstrate these were personal items sold at a loss. For the original poster's arcade machine situation, this confirms you don't need to report it if selling at a loss. And for the glassblowing, the agent I spoke with explained the specific documentation you should keep to establish business intent if you want to deduct expenses. I'm genuinely impressed and apologize for my skepticism. Sometimes it really helps to get information directly from the source.
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Natalie Wang
Just to add to what others have said about the hobby vs business distinction - if you decide to treat your glassblowing as a business (which sounds like your best option tax-wise), make sure you're also tracking all possible business expenses! Some people miss deductions for: - Home office space if you do any work at home - Mileage for all business-related driving (studio, supply shopping, delivering pieces) - Phone/internet portion used for business - Marketing costs (business cards, website fees) - Education (any classes or books about improving your glassblowing) - Tools under $2500 can usually be deducted immediately Also, keep in mind that if you make over $400 net profit, you'll need to pay self-employment tax (15.3%) on that profit. But the good news is you can deduct half of that tax on your return.
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Avery Flores
•This is super helpful! I didn't realize I could potentially deduct part of my internet or education expenses. Are there any red flags I should avoid that might increase my chances of getting audited? I'm worried about claiming too many deductions.
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Natalie Wang
•The biggest red flag would be claiming business losses year after year while having substantial income from other sources - the IRS might see that as trying to create artificial losses to offset other income. Make sure your deductions are reasonable and proportional to your income. For example, claiming $5000 in expenses against $2300 in glassblowing revenue would look suspicious. Keep receipts for everything you deduct, and make sure expenses are truly ordinary and necessary for your business. For mixed-use items like phone or internet, only deduct the percentage used for business (like 15-30% for most side hustles). For mileage, keep a log showing dates and business purpose. One lesser-known tip: having a separate bank account and credit card for business transactions makes your record-keeping much stronger in case of questions. This separation shows business intent and makes it easier to track legitimate expenses.
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Noah Torres
One thing nobody has mentioned yet - if you sell more than $600 worth of items on platforms like eBay, PayPal, Etsy, etc., they'll likely issue you a 1099-K form starting this year. This doesn't change your tax liability, but it means the IRS will know about that income. For your arcade machine example, even though it's a personal item sold at a loss (which isn't taxable), you might still get a 1099-K if you sell it through an online platform. If that happens, you'll need to report the sale on your return to match the 1099-K, but then show that it was a personal item sold at a loss so it doesn't create taxable income. The 1099-K threshold used to be much higher, but now it's just $600, so a lot more casual sellers are getting these forms than in previous years.
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Samantha Hall
•Do you know how we're supposed to report personal items sold at a loss to "match" the 1099-K? I sold a bunch of old electronics and collectibles from my collection last year at way less than I paid, but got a 1099-K from eBay. I can't figure out where this goes on the tax forms.
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Isabella Silva
•For personal items sold at a loss where you received a 1099-K, you'll typically report this on Form 8949 and Schedule D (the same forms used for stock sales). You list each item sold, show your original cost basis (what you paid for it), the sale price from the 1099-K, and the resulting loss. Since these are personal items, the losses aren't deductible - they just offset the income reported on the 1099-K to show zero taxable gain. Make sure to keep documentation of your original purchase prices (receipts, credit card statements, etc.) to support your cost basis. Some tax software will have a specific section for "personal item sales" or "non-business bad debt" that handles this automatically. The key is making sure the gross proceeds match what's on your 1099-K so the IRS systems don't flag a discrepancy.
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