Hobby vs. Business
Miscellaneous income -- same category used for hobbies. "You can list it as other income reported on line 21 of form 1040.  In TurboTax, enter at: - Federal Taxes tab (Personal in  Home & Business) - Wages & Income -“I’ll choose what I work on” Button Scroll down to: -Less Common Income -Misc Income, 1099-A, 1099-C. -The next screen will give you several choices. Choose ""Other reportable Income"". You will reach a screen where you can type a description of the income and the amount. Type in the amount of income and categorize as Tutoring."
Saving money for the future is a good thing.  Whether spending those savings on a business venture makes sense, will depend on a few factors, including: (1) How much money you need that business to make [ie: will you be quitting your job and relying on the business for your sole income? Or will this just be a hobby you make some pocket change from?] (2) How much the money the business needs up front [some businesses, like simple web design consulting, might have effectively $0 in cash startup costs, where starting a franchise restaurant might cost you $500k-$1M on day 1] (3) How risky it is [the general stat is that something like 50% of all new businesses fail in their first year, and I think for restaurants that number is often given as 75%+] So sometimes investing in your own business is financially risky, and other times it is not risky. Sometimes it is a good idea, sometimes it is not. Either way, saving for a future business that you may or may not ever invest in, is still saving money. If you never end up investing in a business, you can instead use that money for retirement, or whatever other financial goals you have. So it's not the saving for a new business that is risky, it's the spending. Part of good personal financial management is making financial goals, tracking your progress to those goals, and changing them as needed. In a simpler case, many people want to own their own home - this is a common financial goal, just like early retirement, or starting your own business, or paying for your kids' college education. All those goals are helped by saving money, so your job as someone mindful of personal finances, is to prioritize those goals in accordance to what is important for you. As mentioned by Stannius in the comments below, there is one catch here: if you are saving money for a short term goal (such as starting a business in a year), then you might want to keep it in low-interest savings accounts, instead of investing in the stock market. Doing this would remove the chance that your investments fail right before you need the startup money. Of course, this means that saving for a business that you never end up starting, could earn you less investment income on your savings. This would be the risk of saving for any specific short term goal that you end up changing later on. I don't mean to be rude, but if you have to ask if you can earn a living from home, the answer is 'probably not.'  Most people are more financially productive at a traditional workplace, otherwise more people would quit the jobs they hate and work at home or develop their hobbies into businesses.   Making a living from home requires being a self-starter and finding clients/customers who accept such arrangements. First, be assured no one earns a living stuffing envelopes, being a mystery online shopper, or selling low to moderate quantities of stuff to their circle of friends.  A few earn a living flipping houses, cars, or shares, or stuff on eBay, but with considerable risk, capital, effort, luck, contacts, and experience/skill.   A few more find success by inventing something or developing a business. Once again, not as easy as it sounds.   You can look for professional work freelancing, or find grunt work on something like vWorker. But these are easily as competitive as the job market, perhaps moreso.  In the case of vWorker you are competing against people in southern asia who almost surely can beat you on price. You can see some IRS info on distinguishing a business from a hobby here.  Nolo also has some info. The upshot is that you can only deduct losses if your activity is, in the judgement of the IRS, a for-profit endeavor.  You don't have to make a profit right away, or make a profit every year, for it to be a for-profit endeavor, but you have to be able to convince the IRS that you're doing it in order to (eventually) make a profit, not just for fun.  You can't just keep deducting the losses year after year if (as in the worst case you suggest) it never makes a profit and doesn't seem to have any chance of doing so. In the terms of profit, you're most likely not going to make any. The other posters had good suggestions about donating and I say the same.   The fact that you had no business insurance leads me to believe that you may just have an expensive hobby and not an actual business. Talk to your accountant/tax preparer and see what and how much loss can be deducted, although that doesn't help in the present.   This is a hard lesson to learn but I hope it sticks. **Always** have business insurance, especially in an area such as yours where hurricanes are relatively normal. It's absurdly foolish and unacceptable not to have insurance.   I hope all works out. The point was not to persuade people to go for a megacorp over a startup. What she mostly preaches is that you can make a living for yourself. If you are going to put 100 hours in at a startup why not just develop your own product? Making a game is hard enough, focus on that. If/when you start getting close to having something to sell, then if you're serious and want the company to grow into a full time venture, briefly consult with a lawyer and possibly accountant to set this up. It will save you a lot of time researching what you have to do and a lot of headache from potentially doing things wrong. If you want to try to do it on your own, I'd recommend getting a book on starting a business because there is more to know than a single post can cover.  You'll probably have to file for a DBA (doing business as) at your city hall in order to be allowed to refer to yourself as the name of your company (otherwise you have to use your personal name). Initiating that will likely initiate annual business taxes in your town in addition to the cheap filing fee. You also want to consider how you will handle trademark (of your business and game) and copyright (of your game). If this is going to grow, you'll have to have contracts written for either employees or for freelancers who might produce assets for you. You may also need to consider writing an EULA for your game, privacy policies, etc. Additionally, you'll likely have to file with your state to collect and send sales tax. You'll also want to meticulously track costs and revenue related to your business. Formally starting a business will likely open you up to property, sales and income tax. For example, where I am, was even taxed on the equipment the business uses (e.g. computers). This is why it makes sense to wait until you're closer to having a product before you try to formally start a business and to consult with professionals on the best way.  The type of business you should form will depend on the scope you plan for the company and the amount of time/money you're willing to put in. A sole proprietorship (what you are by default) means there is no difference legally/financially between you as an individual and you as a company. This may be suitable if this is just a hobby, but not if you intend it to grow because that means any lawsuit directed at your company and its money is also directed at you and your money. The differences between an LLC and corporation are more nuanced and involve differences in legal and tax treatment, however, they both shield you from the previously mentioned problem. If you want this to be more than a hobby you should form either an LLC or a corporation. Do some research on the differences and how they might apply to you and in your state. I'm not sure why you're getting downvotes.  Digital/internet companies are one of many types that excel for individuals because they have extremely low overhead. It takes barely anything to start up if you're doing something like consulting, advertising, etc.  Brick-and-mortar businesses are a much higher risk. Colloquially, there's no difference except for the level of risk (which is an estimate anyway). Classically, investment is creating wealth through improvement or production.  Purchasing a house with the intent to renovate and sell it for a profit would be an investment, as the house is worth more when you sell than when you bought it. Speculation, on the other hand, is when you hope to make a profit through changes in the market itself.  Purchasing a house, letting it sit for 6 months, and selling it for a profit would be speculation.