Hi @MarilynG1 thanks for your answer.
Thanks for clarifying the ruling about state taxes. I guess that simplifies things for me since I won't have to file any state taxes.
1) Regarding hobby income, can I claim expenses/deductions on it ? In the other thread I linked to previously, I was told that for hobby income I cannot claim any expenses or deductions.
2) Secondly, can you suggest whether it's better for me to declare this income as hobby income or self-employed income (Schedule C) ? Even though I made a paid app, I don't depend on the money made from it (which is too less anyway - $102.10), and I think of it more as a learning experience or hobby to see how much I can earn from it, and to see if I can make it's earnings grow without spending much time on it. Yes I can change it's price or something, but I don't advertise it or treat it as a business or something. So which type of income should I report it as ? Which is 'safer' from IRS's perspective ? As hobby income or self-employed income ?
3) In the other thread it was mentioned that if I declare it as hobby income, then I pay taxes based on the gross amount customers paid Apple ($145.55), which is more than what I actually received ($102.10) after subtracting Apple's cut. In other words, I'm charged on an income amount I didn't actually receive (Apple's cut). Is this correct ? Why would the IRS want to charge me tax for an amount I never received ? What's the justification ? Any IRS article/example to back this up ?
