Did you know that your hobby can be a tax deduction?

Do you collect stamps in your free time? Are you crazy about motion figures or comics? If you are an avid hobbyist, know that you can deduct among the costs related to your hobby.

The Internal Revenue Service has published some guidance on what qualifies as a lawful deduction. First, remember that you are required to report any income you earn from your hobby. The rules for reporting income and expenses vary depending on whether the activity is a hobby or a business.

The IRS has the next suggestions regarding hobbies:

• Generally speaking, you can deduct peculiar and crucial hobby expenses. The IRS defines an peculiar expense as one that is common and acceptable in reference to a given activity. The crucial expense is acceptable for the activity.

• Please note that hobby expenses can only be deducted against your hobby income. If your expenses exceed your hobby income, it’s a business loss. The IRS says hobbyists cannot deduct the loss from other income.

• There are different rules regarding income reporting requirements depending on whether your hobby is a business or an activity you engage in only for fun.

• To qualify for the deduction, you must itemize your deductions on your tax return. Expenses are generally divided into three forms of deductions, and there are special rules for every type.

For more on this topic, see IRS Publication 535.