Filing the Schedule C is the safest way to avoid an IRS inquiry. You do pay a higher tax rate on that income, but you can also claim expenses related to this income (in addition to your $250 federal allowance), so you may end up better off taxwise depending on the amount. Also, you mentioned SS and Medicare earlier. If you report this as miscellaneous income, it does not count toward your social security wage credits, but as self-employment income, it does.
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