Earn Money Knitting (Part II)

I was surfing the interweb and came across something new:

Selling hand-made items can be a tricky business. The market goes up and down, as well as the amount of competition. Figuring out how much to charge for your knitting can be a great guessing game that will leave you with nothing but headaches. Consider pricing carefully before you get started for best results.

First, think about the market

• Do you have something unique that no one else is doing or are many people making similar products?


• How well do hand-made items sell in your area?


• Do you have access to a boutique that will help you sell your goods or are you totally on your own?

  >>Read Craft Answers' Full Article

Knitting Tax Break - How Much Do You Spend On Your Knitting?

The Internal Revenue Service reminds taxpayers to follow appropriate guidelines when determining whether an activity is a business or a hobby, an activity not engaged in for profit.

In order to educate taxpayers regarding their filing obligations, this fact sheet, the eleventh in a series, explains the rules for determining if an activity qualifies as a business and what limitations apply if the activity is not a business. Incorrect deduction of hobby expenses account for a portion of the overstated adjustments, deductions, exemptions and credits that add up to $30 billion per year in unpaid taxes, according to IRS estimates.

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.

>>Read More from IRS.gov

And according to Dan Caplinger,

The way the tax laws treat hobbies is quite different from the way businesses are taxed. With hobbies, the general rule is that you can't take any money you spend on your hobby as a deduction. However, if you earn income from your hobby, then you're allowed to deduct hobby expenses up to your hobby income. For instance, if you made $500 from your hobby but spent $1,000 to generate that income, then you'd be allowed to deduct just $500. Furthermore, the deduction is technically a miscellaneous itemized deduction, so you must itemize to claim it. But this also means that if your total miscellaneous deductions don't exceed 2% of your adjusted gross income, you may not be eligible at all for a deduction.

>>Read Full Article

So it may be worth asking, how much do you spend on your knitting?

Earn Money Knitting

I was surfing the interweb and came across the Earn Money Knitting website. Of course, it got me to thinking, "Could I do that?". Or more precisely, "Could I do that again?".

I once sold a scarf and an afghan about 2003 or thereabouts. I shot myself in the foot with the pricing of the afghan; I under-charged by an asinine amount! (I don't know what the hell I was thinking.) The scarf pricing, however, used a much smarter formula. And, luckily, the buyer was a "patron of the crafts" who certainly appreciated the work involved in making anything entirely by hand.

Knitty also has an interesting article outlining things to consider with knitting for profit and I must admit that the final warning was a big concern for me when I agreed to knit the scarf in 2003. The scarf was custom and was practically sold before it was even made. Interestingly enough, the scarf was actually a chore for the exact reason that Janine Nelson mentioned in closing the Knitty article. However, the afghan was not. I think the reason for the difference was all in the state of mind: I never intended to sell that afghan; the scarf was "sold" and the buyer was waiting before I even purchased the materials.

Perhaps a good way to avoid the hobby-turned-business syndrome (or more precisely in a knitter's case, Knitting-Turned-Chore Syndrome) is to establish an inventory, find the client, then sell; instead of finding the client, making the item, then selling. It's probably more of a mind trick than anything else, but it seems to me that first method avoids pressure since there's no upfront commitment; a knitter can establish inventory at his/her leisure. With the second method, there is upfront pressure since the client and the commitment is established before the product is even made.

Of course, if you knit-for-profit activity is what pays your bills, then the laid-back first theory could potentially land you an eviction/foreclosure notice!!