Investors & landlords

You may not think of yourself as running a business, but you’re considered self-employed if you engage in business-like activities.  The IRS has specific rules regarding treating income as business or hobby income.

To determine the difference the IRS considers these questions:

• Does the time and effort put into the activity indicate an intention to make a profit?
• Does the taxpayer depend on income from the activity?
• If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
• Has the taxpayer changed methods of operation to improve profitability?
• Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
• Has the taxpayer made a profit in similar activities in the past?
• Does the activity make a profit in some years?
• Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?

 See Am I considered self-employed? for specifics.  If you are self-employed, then yes, your income is Qualified Business Income.  Also see What self-employed expenses can I deduct? for expenses you may be able to claim to help minimize the taxes you are required to pay.

If you can make the case that you are not self-employed, you will need to delete the entry of the form you received from Amazon and re-enter it to identify it as Hobby income.  Be aware, though, hobby income cannot be reduced by ordinary and necessary expenses like business income.

To delete and re-enter your form in TurboTax Online you can follow these steps:

1. Within your return, click on Tax Tools in the black menu on the left side of the screen.
2. Click on Tools.
3. Click on Delete a Form. 
4. Scroll down to your form and click Delete.
5. Under Federal in the black menu bar click Wages & Income to get back into your tax returns.
6. Click Edit/Add for your form 1099
7. Input the details of your 1099 and click Continue
8. Answer the questions and Continue until you get to the Does one of these uncommon situations apply? page
9. Choose This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common) and click Continue