How Tax Rules Shape Your Side Business Hobby

Lucas and Luna dig into the IRS's 'hobby loss' rule, which can turn a money-losing side business into a personal expense nightmare. They walk through the nine-factor test the IRS uses to decide if your Etsy shop or dog-walking gig is a real business or just a fun hobby. They focus on the 2017 Tax Cuts and Jobs Act change that eliminated a key safe harbor and look at a real 2025 Tax Court case involving a vintage toy seller in Portland who lost $28,000 in deductions. Lucas explains why the IRS cares, how the 'profit motive' presumption shifted, and what you need to document today to avoid a clawback. Luna asks the practical questions about filing Schedule C versus hobby income, and when it's worth hiring a tax pro. If you've ever wondered whether your weekend hustle counts as a business, this episode is for you. #HobbyLossRule #SideHustle #TaxCourt #IRS #ScheduleC #ProfitMotive #TaxDeductions #SmallBusiness #FreelancerTaxes #TaxTips #EtsySeller #GigEconomy #TaxPolicy #Economics #FexingoBusiness #BusinessPodcast #TaxPodcast #FinancialLiteracy Keep every episode free: buymeacoffee.com/fexingo