Now, under the new tax law, this itemized deduction for hobby costs is eliminated.
Meanwhile, a slate of tax breaks are in effect for small businesses, including a new 20 percent deduction on qualified business income for certain entrepreneurs with pass-through entities.
To claim the 2018 appropriate business tax breaks for your side hustle, take the remaining time in the year to make it official, said Weston.
That means, you should separate your business’s finances from your own by both opening a bank account and using a separate credit card for your side hustle, she said.
“If the IRS sees commingling of funds, the assumption is that anything deposited into the account is revenue,” Weston said.
You can also set up an entity — say a limited liability company — for your side business, which has the added benefit of offering you legal protection from creditors. Be sure to advertise and market your business, too.
“You’ll want to make sure that you’ve documented that you’re in it for a profit, or you risk losing the deduction,” said Weston.
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