1099-NEC for Reviews

[Sami9]

Hi. I signed up to do reviews for products at Amazon Vine, and was under the impression that I would only be taxed on the taxable value of the product. Even as you select the items it has "taxable value" beside the amount of it. So I was thinking it was like paying sales tax on that amt. Then I rec'd a 1099-NEC and I'm not sure how to report this since I'm not self-employed, nor do I have deductions to take. It was only doing reviews for free products and most ended at goodwill that wasn't used in the home. Nothing was sold or anything like that to make a business from it. It was just fun to pick out things to get and do the reviews to get freebies. So the shocker was when the 1099-NEC came and the full amount of the products was totaled on it, like it was money sent, but wasn't. I had no idea we were to pay taxes on the full amount. I did a practice Schedule C and that put me way up there in the taxable income, and also paying employer and employee income which it is not. Can I put that income as "other" on the Schedule 1 since it's NOT self-employed income? It's only for doing reviews for products, and is in no way a business. Thank you. 

[KrisD15]

No, Amazon is acting as if they are contracting you to preform reviews and the compensation that they give to you is the value of the products you get to keep. 

HERE is a link with more information. These additional answers discuss the possibility of claiming the 1099 as business income and then also expenses the value of the items as business expenses. This would end up with zero income. 

There are also comments about claiming additional expenses, such as mileage if you need to pick the product up from the post office lets say.

The problem with some of this thinking is that the IRS won't agree with someone claiming to test products to create a negative income. The IRS only views a business as an undertaking with the purpose of creating income. If you were to say you test products knowing that you're never going to make a living off doing that, the IRS will say, "Well then, don't do it, or just do it as a hobby."

I suggest claiming only a portion of the cost of the products as expenses, (since you only need some for testing and you keep the rest for personal use) or claiming the income more like a hobby. Hobby reporting can report a profit but cannot claim a loss in any year.

Since Amazon uses Form 1099-NEC, it must be reported on Schedule C. The IRS re-issued that form ONLY for Self-Employment income and Amazon knows that.

If you don't plan to make a profit, name the business on Schedule C something like "Online Testing HOBBY".

Claim the income reported on 1099-NEC

Claim expense on a portion of the products that you feel is reasonable. 

DON'T claim a loss unless you are prepared to convince the IRS that you THOUGHT you were going to make a profit testing products, but found out you were wrong, or, that this is the start of a business of  becoming a money-making influencer. 

Going forward, you'll need to decide if you enjoy testing products and are willing to claim the income Amazon reports, stop testing products for Amazon, or convince Amazon to pay you an additional fee for your service 

[Sami9]

Thank you Kris 15. That sheds a lot of light on it. Amazon was sneaky in that respect. I'm going to opt out of any more freebies for reviews and take that as a lesson not to venture into anything like that again. There is that old saying. "Nothing is free, no matter how you coat it". 

Thanks again for your advice and fast response! 

Sami9