Since the amount is under $600, they are not required to send you a form 1099-Misc, as is usually done for these type of payments ("non employee compensation").
You report the income from your own records. The IRS considers undocumented cash income (no W-2 or 1099-MISC), for work performed, to be self employment income. Enter at "Business Income & Expenses" and TurboTax (TT) will complete Schedule C or C-EZ for you and allow you to deduct any expenses associated with this income. You'll also have to pay self employment tax (social security & medicare tax) on any profits greater than $400.
However, since the amount is less than $400, self employment tax will not be due. Because of this and if you have no expenses to deduct, there is a way to avoid schedule C. (Although your taxes will come out the same, to be technically proper, you should use Sch. C). Instead of entering at business income enter at:
- Federal Taxes tab
- Wages & Income
Scroll down to:
-Less Common Income
-Misc Income, 1099-A, 1099-C
- On the next screen, choose – Other reportable income
-For description enter Other income. It goes on line 8 of Schedule 1
But, It will not be counted as earned income, if you are otherwise eligible for the Earned Income Credit (EIC)
