Hobby vs. Business
Miscellaneous income -- same category used for hobbies. "You can list it as other income reported on line 21 of form 1040.  In TurboTax, enter at: - Federal Taxes tab (Personal in  Home & Business) - Wages & Income -“I’ll choose what I work on” Button Scroll down to: -Less Common Income -Misc Income, 1099-A, 1099-C. -The next screen will give you several choices. Choose ""Other reportable Income"". You will reach a screen where you can type a description of the income and the amount. Type in the amount of income and categorize as Tutoring."
Colloquially, there's no difference except for the level of risk (which is an estimate anyway). Classically, investment is creating wealth through improvement or production.  Purchasing a house with the intent to renovate and sell it for a profit would be an investment, as the house is worth more when you sell than when you bought it. Speculation, on the other hand, is when you hope to make a profit through changes in the market itself.  Purchasing a house, letting it sit for 6 months, and selling it for a profit would be speculation. "There are moral distinctions that can be drawn between gambling and investing in stocks. First and I think most important, in gambling you are trying to get money for nothing. You put $100 down on the roulette wheel and you hope to get $200 back. In investing you are not trying to get something for nothing. You are buying a piece of a hopefully profit-making company. You are giving this company the use of your money, and in exchange you get a share of the profits. That is, you are quite definitely giving something: the use of your money for a period of time. You invest $100 of your money, and you hope to see that grow by maybe $5 or $10 a year typically. You may get a sudden windfall, of course. You may buy a stock for $100 today and tomorrow it jumps to $200. But that's not the normal expectation. Second, gambling is a zero sum game. If I gamble and win $100, then someone else had to lose $100. Investing is not a zero sum game. If I buy $100 worth of stock in a company and that grows to $200, I have in a sense ""won"" $100. But no one has lost $100 to give me that money. The money is the result of the profit that the company made by selling a valuable product or service to customers. When I go to the grocery store and buy a dozen eggs for $2, some percentage of that goes to the stockholders in the grocery store, say 5 cents. So did I lose 5 cents by buying those eggs? No. To me, a dozen eggs are worth at least $2, or I wouldn't have bought them. I got exactly what I paid for. I didn't lose anything. Carrying that thought further, investing in the stock market puts money into businesses. It enables businesses to get started and to grow and expand. Assuming these are legitimate businesses, they then provide useful products and services to customers. Gambling does not provide useful products and services to anyone -- except to the extent that people enjoy the process of gambling, in which case you could say that it is equivalent to playing a video game or watching a movie. Third -- and these are all really related -- the whole goal of gambling is to take something from another person while giving him nothing in return. Again, if I buy a dozen eggs, I give the store my $2 (or whatever amount) and I get a dozen eggs in exchange. I got something of value and the store got something of value. We both walk away happy. But in gambling, my goal is that I will take your money and give you nothing in return. It is certainly true that buying stocks involves risk, and we sometimes use the word ""gamble"" to describe any risk. But if it is a sin to take a risk, then almost everything you do in life is a sin. When you cross the street, there is a risk that you will be hit by a car you didn't see. When you drink a glass of water, there is the risk that it is contaminated and will poison you. When you get married, there is a risk that your spouse will divorce you and break your heart. Etc. We are all sinners, we all sin every day, but we don't sin quite THAT much. :-) (BTW I don't think that gambling is a sin. Nothing in the Bible says that gambling is a sin. But I can comprehend the argument for it. I think gambling is foolish and I don't do it. My daughter works for a casino and she has often said how seeing people lose money in the casino regularly reminds her why it is stupid to gamble. Like she once commented on people who stand between two slot machines, feed them both coins and then pull the levers down at the same time, ""so that"", she said, ""they can lose their money twice as fast"".)" "I am a healthcare compliance consultant making good money. I understand the logic behind ROI and education. I was trying to raise the point that choosing what to study is more than what you make when you're done with college or what the ""value"" of your degree is. Can't we value education intrinsically? Why does it have to be tied to ROI? Maybe the business sub isnt the best place for this debate, but I think its important." Renting a house out using a management company is mostly passive income. Earning affiliate income from companies that pay on a recurring basis is closer to passive income. Why is one person more succesfull than another?  At the end of the day I think it simply comes down to personal choices, some people will choose to invest their time in profitable indevours and some will not.   This of course assumes people have a reasonable access to a mean of improvement (free education, vocational training, etc.) Agreed. If you create a small sustainable biz for yourself, you create the freedom to pursue the hobby project ideas as well. You have a strong base which protects you.  A software biz like ours is WAY more tolerant than a job. Like when I got sick for 3 mos and couldn't work at ALL, we didn't grow, but we didn't collapse either. It pretty much coasted. That means we have way more free time than we think we do. "I appreciate your taking the time to shoot some holes in this oft repeated statistic.  However, I do disagree on some points.  &gt; Nor is there anything wrong with the person then ENDING that ""business"" and moving on... to another (different name, different field) business... or taking a job with some company  There may not be anything shameful about doing that, but that scenario is, indeed, a business failure.  People do not shutter a profitable (successful) business and then go to work for someone else.  I believe a key contributor to the confusion is talking about the self-employed and business owners in the same breath.  Someone who's self-employed basically owns a job.  His income will always be directly proportional to the amount of time spent working and the company does not exist apart from himself.    A business owner, on the other hand, has processes/equipment/staff/IP in place that generates income whether or not she gets out of bed in the morning.  These are different people with different goals and cannot be lumped into the same demographic block." You would report it as business income on Schedule C.  You may be able to take deductions against that income as well (home office, your computer, an android device, any advertising or promotional expenses, etc.) but you'll want to consult an accountant about that. Generally you can only take those kinds of deductions if you use the space or equipment exclusively for business use (not likely if it's just a hobby).  The IRS is pretty picky about that stuff. I know. It's crazy, if you step back and look at it.  The issue is that startup media is really tabloid media. It focuses only on the big, unlikely wins, which appeals to our base instincts. We want to believe that we are Cinderella dressed up in Ruby on Rails.   But the fact is, the more you read about extraordinary things, the more likely you are to think it will happen regularly, and happen to you. That's a basic cognitive bias, the availability heuristic.   That, and the cooing of venture capitalists, is what leads people to believe that their hobbies or fun non-profit projects could and should make them rich. "?  You quoted an oft cited oft disproven false factoid. It's extremely biased. Like you seem to be.   Most of those ""self made"", notice those quotes, people came from money. Their business is ""self made"", with family money. Like the article implies." You could say the same thing but replace money with pacman and it would be true for the guys who are really good at pacman.   Making money can be no different than any other hobby. The only difference is that you can engage in direct exchange after the fact instead of barter exchange.   But make no mistake enjoying it does not make warren any more insane than the pacman guys (or more seriously most academics). These 'issues' don't exclusively relate to the 'sharing economy', the challenge of uncertainty would exist for any small business / independent contractor. It's not as if people didn't work as independent contractors in these industries before, it's just now the industries are being enhanced and overhead lowered, from technology.  For example:  Uber driver vs Medallion [Leasing] Taxi Driver  AirBNB landlord vs Apartment landlord, vacation rental landlord, or traditional bed &amp; breakfast owner.  PostMates messenger vs traditional bike messenger One owns bar/restaurants and is a millionaire, but claims he never used anything he learned from the degree. He is more of a COO so in a way he doesn't need to think about the economics of the business. He just needs to operate/maintain.   The other, lost his job so parents bought him a gas station.   These people never really went the corporate route so they aren't the best examples, imo. By simplifying my hobbies, I have more time for money-saving activities such as researching deals, creating an effective coupon-clipping system, and making more foods from scratch (which doubles as entertainment since I enjoy it).  When I run frantically from activity to activity, I tend to mindlessly throw away more money, too.  By living more intentionally, I think about my purchases more as well. On the simplifying note, never underestimate the power of less stuff in terms of being able to fit into a smaller home.  That leads to less space to heat and cool, which leads to savings.  Everyone has their comfort level with less, of course, and some people love space.  There are just trade-offs to more stuff. Possible alternative: In my case, the part-time locksmithing is a small enough portion of my I come that I just submit it as hobby income, rather than trying to track it as a separate entity.