Thanks Kris for the answers. I'm getting some clarity now.
Seems like there's a choice whether I should declare it as hobby income or self-employment income. In my mind, I think hobby is a better classification because that's what I consider it as, a hobby. I don't consider this to be a 'business' where I'm 'self-employed'.
Also I checked Apple's payment documents, and it only lists the proceeds I received as exact amounts, which is $127.30 for the entire 2023 year. This is the exact amount that I actually made, and received in my bank account. Apple's documents don't tell me the exact amount the user's paid for my app. Rathe, only an approximate amount is mentioned, which is $182. The actual number may be slightly higher or lower than that, which they don't show me.
I have a few more questions:
1) I'm still trying to understand why the IRS wants me to pay taxes on income I never received. I have tried looking at IRS documentation, but I don't see anything which suggests that my income is based on what customer's paid, rather than what I received. Can you please refer me to any IRS documentation which clarifies this ? I understand that with hobby income, I cannot take deductions, which is understandable. For example, I have to pay a flat rate annual fee to Apple after which my app is available for sale on their platform. It makes sense to not deduct this expense, since it's my choice to pay this as part of my hobby. But why should I pay taxes on income I didn't even receive ? I don't get this.
2) After looking at Apple's payment documentation, I see that there's about a 2 month delay in me receiving payments for my proceeds. For example, for sales that happened in June 2023, I received my proceeds sometime in August 2023. Because of this, for all sales of my app that happened in 2023, I received the proceed payments between March 2023 and February 2024. So when I have to determine my income for 2023, do I consider the sale date as being when I got income, or when I actually received it in my bank account ?
