as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.
system
deducting hobby expenses on my federal income taxes?
user
i suggest to start charging slightly more than needed to cover expenses. all you need is to show profit. it doesn't have to be significant - a couple of hundred of dollars of consistent yearly profit should suffice to show a profitable business. then you can deduct on schedule c all the related expenses. the caveat is that the profit (after the deduction of the expenses will be a bit smaller) will be subject to not only income tax but also the self-employment tax. but at least you'll pay tax on profit that is not entirely phantom. i remember suggesting you getting a professional consultation on this matter a while ago. you should really do that - talk to a ea/cpa licensed in your state, it may be well worth the $100-200 fee they'll charge for the consultation (if at all...).
assistant