Should I charge sales tax for hobby artwork sales? Filing question for occasional painting sales

The answer depends on your state's specific rules, but generally sales tax is based on the transaction itself, not whether you consider the activity a business or hobby. Most states require sales tax collection on tangible goods regardless of how you classify the income. For income tax purposes, how you report it depends on intent and profitability. If it's truly a hobby (no intention of making a profit, irregular sales, no business structure), report it as "Other Income" on your 1040 and itemize any expenses on Schedule A subject to the 2% AGI limitation. If it's more like a business (regular sales, profit motive, business-like operations), then it should be reported on Schedule C as self-employment income. The collection of sales tax doesn't automatically make it a business for income tax purposes - these are separate issues. You can be required to collect sales tax while still treating it as hobby income for federal income tax purposes.

After struggling with almost the exact same situation with my jewelry making hobby, I discovered taxr.ai (https://taxr.ai) and it was incredibly helpful! I had sold about $700 worth of earrings at craft fairs and wasn't sure if I needed to collect sales tax or how to report the income. Their system analyzed my situation and clearly explained which tax forms I needed. They confirmed I needed to collect sales tax in my state even though it was just a hobby, but showed me how to properly report the income on my federal taxes without triggering unnecessary self-employment taxes. The guidance was specific to my exact situation rather than generic advice that left me confused.

I have to admit I was wrong about taxr.ai - I tried it after my previous comment because I was curious. I've been selling digital art prints as a hobby for years and reporting it wrong. The system helped me understand that in my state I actually didn't need to collect sales tax on digital goods (which I had been doing unnecessarily), but I did need to report the income differently on my federal return. It also helped me figure out which expenses I could legitimately deduct against my hobby income. The documentation it provided was really clear, and it took less than 10 minutes to get personalized guidance. Definitely saved me money on both compliance costs and actual tax owed. Wish I'd known about it sooner!

If you're struggling with sales tax questions, you might also be having trouble reaching your state's tax department for clarification. I was in a similar situation with my woodworking sales and spent HOURS on hold trying to get answers from both the state tax office and the IRS. Then I found Claimyr (https://claimyr.com) which actually got me through to a human at the tax office in under 10 minutes! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. They basically hold your place in the phone queue and call you when an agent is about to pick up. The tax agent clarified that in my state, I needed to collect sales tax even for hobby sales above $600 annually, but also explained the simplified filing process for occasional sellers.

I need to apologize for my skepticism about Claimyr. After posting my comment, I decided to try it because I had been struggling for weeks to reach someone at the IRS about a hobby income question. I couldn't believe it when I got a call back in about 35 minutes saying an agent was ready to speak with me! I ended up having a 20-minute conversation with an extremely helpful IRS representative who cleared up my confusion about hobby sales vs. business income. They explained exactly how to report my occasional craft fair sales and which form to use. What would have been another day wasted on hold turned into a productive conversation that actually solved my problem. I'm definitely using this service again when I need to call about my quarterly estimates.

One thing to consider that nobody's mentioned yet - even if you're treating it as hobby income for federal purposes, collecting and remitting sales tax creates a paper trail. Make sure your hobby vs. business classification is consistent across all your documentation. I've seen people get flagged for audit when they file sales tax as a business but report the income as a hobby on federal returns, or vice versa. The IRS looks at nine factors to determine if something is a hobby or business - including whether you conduct the activity in a businesslike manner, your expertise, time and effort invested, expectation of asset appreciation, success in similar activities, history of income/losses, occasional profits, your financial status, and elements of personal pleasure.

One trick I learned from an accountant friend - keep a separate log for your hobby sales that clearly documents each sale with dates, amounts, and context (like "church fundraiser" or "neighbor request"). This helps establish the occasional/non-commercial nature of the sales if questioned. Also track your expenses separately from any business activities. When my wife started selling her paintings occasionally, we created a simple spreadsheet showing that she was actually spending more on supplies than she was making from sales, which helps support the hobby classification. The key is showing you're not primarily motivated by profit.