I have a small home business in addition to my regular job. How do I report the activity?

Activity from a for-profit business is reported on your tax return using Schedule C. Income and expenses are shown to determine the net income or net loss. Net losses may be used to offset other income on your return.

If a business does not meet the profit requirements for a five-year period, it may be subject to the facts and circumstances test to determine if a profit motive exists.