When Does a Hobby Become Taxable?

You're right, that is two questions. But, luckily, I have two answers.

I'll assume you're in the US. If not, then this might not apply.

1) At what point do you need to report income from a hobby?

The relevant part of the US Tax code states that

"... gross income means all income from whatever source derived ..."

meaning that if you make $20 selling a craft of some kind, you need to report that $20 on your income tax return(s).

Where a hobby and a business differ is whether you can claim losses. With a business, you can (up to a point). With a hobby, you can only claim expenses up to the amount of income. This means that you don't have to report income if you didn't actually turn a profit with you hobby, but on the flip side, you can't claim a loss either.

2) Should I be charging sales tax on things I sell if I don't have an official business?

Probably not. I can't speak for all states, but in my state, we receive a certificate that allows us to collect sales tax under the appropriate circumstances (and, of course, remit it to the state). We received this after registering our business. So, if one does not have that certificate, one cannot collect sales tax. (Or, if one does, it's illegal.)

Now, is there a threshold for how much you need to make by selling goods in order to have to collect sales tax? I don't know. But if you search for starting a business in --your state-- you probably can find out.