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In the recent Tax Q&A about deductions, TMFTaxes stated that "Other items, such as hobby expenses, are only deductible up to the amount of income produced from the activity."

This contradicts my understanding of the deductibility of hobby expenses. I thought that if an activity is classified as a "hobby" by the IRS, then you can not deduct any expenses related to that hobby. If that hobby creates income, such as winnings from competition, it must be included as "Other income" and gets taxed. I've always felt that to be a bit unfair, but I verified it with multiple sources (many, many years ago).

Please set me straight. Every year, I have winnings from my "hobby", and I claim them as income. However, it always costs me much more in expenses (hence, the "hobby" classification). I'd love to cut out that income each year by deducting an equal amount of expenses if I can!

- LoopinFool
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