It seems that Karen and I have separate views on what a hobbyist is.
My views:
First of all, it's important to note that if you are selling anything, you are a business, and are subject to laws in your area governing your type of business, though the IRS does declare you to be a hobbyist if you do not come out ahead most years.
At it's most basic, a hobbyist is merely someone who does what they want to do, makes what they want to make, which could put about 90% of everyone who works for themselves into the hobby category.
But in my mind, a hobbyist who sells doesn't really need the income from it. Usually when a hobbyist sells their stuff, it's because the stuff is taking over their home, or they just want their supply money back. Anything extra is icing on the cake.
But there's more layers to it. Many hobbyists I know who sell their stuff are just trying to get some of their money back to make more. A few of these people drive me nuts. If your going to give it away, just give it away, get some money back in the form of a deduction.
These people don't make business plans or anything for a business, a lot don't even realize they have to pay taxes, much less know anything about CPSIA laws for kids products, etc.
But then there's also the people like Karen, who run their hobby like a full on business, all the promotion, taxes, laws, business plans, etc. (hell, I'm not a hobbyist, and I don't even have an official business plan for OneStitch designs).
While those people are still technically a hobbyist, they are actually somewhere in between.
I think that the part about "makes only what they want to make" might be a very good distinction. If I have to make a choice between making practical things that I know will sell or making the things that I really enjoy I always choose the latter knowing full well that I might not be able to make an online business work that way. It's so much easier to sell expensive stuff offline when they can touch it, try it on and easily afford it. If I really needed this income to survive or if I was in a situation or location where just going out and getting a regular job wasn't a realistic option I'm sure that I would change my tune fast. As it stands if my time runs out I would just give it up and go do some nonprofit or IT consulting if I needed the money. That isn't an option for most people because they aren't semi-retired.
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