My wife earned $295.08 in 2018 as a substitute teacher at our private church school. Does this need to be reported in our income tax return?

[Leonard · Accepted solution]

Yes the IRS requires that all income be reported on your tax return.  The school is not required to issue you a 1099-misc if they paid you less than $600 and you were classified as an independent contractor. If you were an employee (which a substitute teacher would normally qualify as) then they should issue you a W-2. 

Otherwise, the only way to report income you worked for, reported on form 1099-misc box 7, is under self-employed business income. A benefit to reporting your income here, is that you would also be able to deduct your expenses. 

You might consider talking to the school about them classifying you as a contractor. There are large penalties for miss-classifying 'employees' as 'contractors', even though it's easier to file. Of course, it is a small amount and may not be worth it. However, when you work for income, there are only two options for reporting it; either W-2 employee income or self-employed income.