So I have filed a Schedule C for a Website/Photo business for 3 years, it made money (like $1000 the first year), but lost money due to depreciation (writing off new camera gear) the last two years, losses totaled under $2000. This business is over as of today as it is not worth the effort, I told my remaining client ( a friend ) I will do the basic work he needs for free because in the end it will save me money and hassle to not be self employed anymore for such a minor profit or loss. So in 2019 I have a $900 1099-misc that I need to deal with for 2019 tax year.
I have 3 options (I think) , but do not know which one is correct,
Option one file Schedule C again this year, $900 income and I did buy a new lens I used for the business in 2019 that cost $1300 that I can write off as depreciation like I did last year, so claim a $400 loss for the 3rd year in a row due to depreciation, (is this an audit flag?)
Option two, can I claim this as simply hobby income this year, pay the tax on the $900 but not get hit with SE employment tax and write nothing off,
Option three, I claim it as a Schedule C take no deductions and pay the highest tax amount of all three options to avoid any red flags,
I don't have any intentional errors in any tax returns, but the tax code is not simple so I don't want to deal with an audit to find out I messed up something 7 years ago and now ow $5000. lol
