Taxes and small Business?

Question

ok, so i just started making and selling jewlery from my home in 2006. I have been to a few craft fair type shows to sell my wares. My question is: Can i deduct the amount i spent to make the jewlery from my taxes? I do not have a business liscence.

Answer 1

The IRS is likely to view your activity as a hobby instead of a business unless you're turning a reasonable profit from it and are acting as if you were a business. Such things as getting the proper licenses and registering for your state's sales tax if there is one all will help to prove your intent.