Does taking online surveys count as earned income?

[luciekitty04]

I receive SSI benefits and do not work, therefore do not pay taxes. I take surveys online and receive rewards in Amazon gift cards. The rewards are inconsistent and vary month to month. I am wondering if without ever working and never paying taxes do I need to fill out some sort of tax form or not? Thank you and God bless! 

[Mike9241]

since you are performing services what you receive is taxable compensation.  you only need to file a return if the total amount of these gift cards is over $400.  you report this income on schedule C. in addition TT will compute self-employment tax. 

[luciekitty04]

@Mike9241 , do you know if I need to report this to Social Security for SSI? Like I said, I have never filed taxes before because I have never worked. Also, do you know how much I will have to pay in taxes for filling out a form? One of the survey companies said I needed to fill out a W-9. Does this make sense to do that for surveys?

[Mike9241]

for SSI purposes I do not know. you will have to call unless another participant on this forum answers your question.

yes a w-9 is to furnish them with your Social Security Number so that can issue you a 1099. 

if you do not want them to have your social security number you can apply online at the IRS for an EIN. 

you would then furnish them with the EIN.  

https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-n... 

you can have at least $12,200 in adjusted gross income without having to pay income taxes however you may have to pay self-employment taxes as follows. TT will compute these taxes from the entries you make on schedule C,

net income from schedule C times .9235 = taxable SE earnings. if the result is less than $400 you owe no SE taxes. ignore the following. if $400 or more multiply the result by .153 

if all this is bewildering to you, you may want to upgrade to have a TT pro prepare your return or you can pay for a pro.   I don't know what your financial situation is, but if either option is unaffordable you may want to contact your state's CPA society.  if you qualify they may prepare your return for a lower charge. 

[Hal_Al]

  The statement "you only need to file a return if the total amount of these gift cards is over $400" is a little inaccurate.  You need to report the income, on your tax return, regardless of the amount. The $400 threshold (actually $433) is for paying self employment (social security and Medicare) tax.

You will want to use the self employment version of TurboTax. 

TurboTax also has another free product called the Free File Edition (not to be confused with the regular Free Edition).  It has free Federal preparation and free State preparation. There is no efiling fee. It is not available after October 15

The Free file Edition can handle a 1099-MISC.

The Free file Edition is more fully-featured than the regular Free Edition.  The Free File Edition can prepare Schedule A, C, D, E, and F that the Free Edition cannot. 

For Free File Edition a user needs to meet only ONE of these qualifications:

•      AGI of $36,000 or less
•      or active duty military (including Reservists and National Guard) with a military-issued W-2 and a 2019 AGI of $69,000 or less
•      or eligible for the Earned Income Credit (EIC aka EITC).

The FREE FILE Edition is located at:
https://turbotax.intuit.com/taxfreedom

As Mike9241 said, this is a tax forum, and it's unlikely someone can answer your question about reporting the earnings to the Social Security Administration (SSA).   If you have more than $432 of self employment income, you will be filing Schedule SE, as part of your tax return,  to pay your self employment (social security and Medicare) tax.  So, the income is automatically reported to SSA.

[dmertz]

Net profit from self-employment needs to be at least $433 before you must file Schedule SE, not $400.  The $400 threshold is compared to only 92.35% of net profit.

[Opus 17]

If you file a tax return for any reason, you must report all your taxable income, regardless of the $400 limit on self-employment.

However, I think consideration here should also be given to the question of whether this is "other" income like a hobby, or self-employment income from "an ongoing trade or business." 

https://www.irs.gov/businesses/small-businesses-self-employed/business-activities

See here for a 9 factor test:

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

[luciekitty04]

@Opus 17, I have never worked and never filed taxes. Does claiming gift cards for Amazon inconsistently count worthy to fill out a W-9? 

[Hal_Al]

Q. One of the survey companies said I needed to fill out a W-9. Does this make sense to do that for surveys?

A.  Yes.  But the question is academic.  If the company says you have to do it if you want the "job", you have a choice to make.  If they send you a form 1099-Misc or 1099-NEC, you will have to report the income. If they sent the new 1099-NEC, the IRS will expect the income to be reported as self employment. If not, you can report it as other income.

Q.  Does claiming gift cards for Amazon inconsistently count worthy to fill out a W-9? 

A. That's a matter of opinion.  I think not, but at least one survey company thinks yes.

You don't say whether 2020 is your first year doing this. If so, you may be OK reporting it as hobby income.  Hobby income is still taxable income; it's just not subject to self employment (FACA) tax. Hobby income, though taxable, is not earned income. You can not claim the earned income credit, additional child tax credit, or qualify for an IRA contribution based on hobby income.

[Opus 17]

The payer is required to issue a some type of 1099 if they pay you more than $600 in a year. Giving you the W-9 to fill out now is a good practice for them because they may not know which of their reviewers will cross that $600 threshold, and if they wait until you cross the $600 threshold to send you the W-9, they can get in trouble.  Sending you a W-9 does not necessarily indicate that they will issue a 1099 and it does not indicate what kind of 1099 they will issue.

If the payer classified it as hobby income they would report it on a form 1099–MISC, and if they consider it self-employment income they will use a 1099-NEC.  Which form they use is not an ironclad proof of the type of income, but if they use a 1099-NEC, it creates a strong presumption at the IRS that this is self-employment income.

again, the difference between hobby income and self-employment income is that self-employment income is generated from “an ongoing trade or business.“ If you believe this is a hobby, and the payer uses a form 1099-NEC, you can still report it as hobby income, but you should expect that the IRS will send a letter asking you to prove this or else pay self-employment tax.

[luciekitty04]

@Hal_Al , they want me to fill out a W-9. Is that a 1099-Misc or 1099-NEC? 2020 is the first year I have been asked by this company to fill out a W-9. They said that the rules changed and if you earn more than $600 in points for gift cards, you need to fill it out. 

[Hal_Al]

@luciekitty04 

You filling out a W-9  for them will result in them issuing you a 1099-NEC, after the end of the tax year.  They may issue a 1099-Misc, instead.  Only they can tell you which one.  Basically the W-9 just gives them your SS#.  It also gives yo a chance to have them withhold tax (withholding is not mandatory).  The $600 rule is correct.

[Opus 17]

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@luciekitty04 wrote:

@Hal_Al , they want me to fill out a W-9. Is that a 1099-Misc or 1099-NEC? 2020 is the first year I have been asked by this company to fill out a W-9. They said that the rules changed and if you earn more than $600 in points for gift cards, you need to fill it out. 

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Here is the flow of information:

1. You provide the payer with a W-9 that identifies you and gives your SSN.

2. At the end of the year (2020 or 2021), the payer may issue a 1099 reporting what they paid you.  They are required to issue a 1099 if they pay more than $600, but they can choose to issue a 1099 if they paid less.  1099s must be sent by January 31.  It could be a 1099-NEC or a 1099-MISC.

3. When you prepare your tax return, you use information from the 1099 to report your income to the IRS.  You are expected to report all your income, even if not reported on a 1099.

a. If the money is reported on a 1099-MISC, the IRS will usually allow you to report it as hobby income. 

b. If the money is reported on a 1099-NEC, the IRS will usually presume that it is self-employment income. If you believe this is hobby income and report as such, the IRS will usually request further explanation from you. 

You don't actually send the 1099 to the IRS, you use the information to prepare your tax return and keep the 1099s for your records. 

[oldstu66]

What if you earn money from multiple different online surveys, like 400 on one, 300 on another, 200 on another.

do you still need to file if they're under the limit for different companies?

[Hal_Al]

Q.  What if you earn money from multiple different online surveys, like 400 on one, 300 on another, 200 on another. Do you still need to file if they're under the $400 limit for different companies?

A. Yes.  The fact that you have multiple "clients" makes it more likely that the IRS will consider you self employed.  Self employment tax is due if your total, from all clients, is more than $432, even if no single client paid you more than $400.