Amazon Vine 1099-NEC how do I report income and adjustments on Turbo Tax

[SRS23]

Extract from  IRS website "About Form 1099-NEC, Nonemployee Compensation"

https://www.irs.gov/faqs/interest-divid[product key removed]-of-income/1099-misc-independent-contrac...

"If you're not an employee of the payer, and you're not in a self-employed trade or business, you should report the income on line 8j of Schedule 1 (Form 1040), Additional Income and Adjustments to Income [PDF] and any allowable expenses on Schedule A (Form 1040), Itemized Deductions."

On the 1099-NEC itself IRS says:

"If you are not an employee but the amount in box 1 is not self-employment (SE) income (for example, it is income from a sporadic activity or a hobby), report the amount shown in box 1 on the “Other income” line
(on Schedule 1 (Form 1040)). "

I am in the Amazon Vine program to review products that I receive for free. I do not run it as a business, I am not self employed, I do not receive any cash compensation,  I do not sell any of the products received. 

Following the IRS instructions I want to report my Amazon Vine 1099-NEC income on Schedule 1 Part I Line 8j and report adjustments on Schedule 1 Part II line 24z.

Income would be the value of the products provided to me and reported by Amazon on my 1099-NEC.

Adjustments would be the depreciation of the value of the products I received in the process of doing the review. Not writing sufficient reviews would get me kicked off the program. Reviewing the products means I have to use it for a few months write reviews and update reviews based on my experience. Once my reviews are complete, the product usually has value though it less than when it was new.  Some consumable items would have no value left but most products would.

How do I get TurboTax to do allow me to report both the income and adjustment on Schedule 1 for a 1099-NEC?

I have the value of the products from Amazon and now need to make an adjustment to the income for the depreciation of the products.  The difference will be my "Other Income". 

[ThomasM125]

First of all, since you are providing a service for compensation in the form of merchandise,  and what you are involved with doesn't appear to resemble a hobby, the IRS is likely to consider it self-employment income. As such, it is recommended that you report it as if it was a business.

I don't know how the products you receive are valued, as reported on the form 1099-NEC that you receive. However, if you feel they are over-reporting the value, you can make an expense entry for the business to compensate for that. The only problem you will have is coming up with a way to make an objective estimate of the amount by which the reported income is overstated. You will need to document your method and keep it on file in case you get audited by the IRS.

[SRS23]

It's not a business. I do not do it for profit. I cannot sell the products for 6 months. By the time I can sell the product the household/consumer products are close to worthless. I don't intend to sell them all at. I get no cash from Amazon and most of the products are not sellable - but you are suggesting that I will pay  income tax and self employment tax on something done sporadically and not for profit? Does not make any sense.  I am willing to pay income tax on the value of the item less depreciation that occurs during the process of and the duration of the review.

Humor me  - just tell me how specifically how I can get Turbo Tax to make an entry in Schedule 1 Part II section "Other Adjustments".

[KrisD15]

First and foremost, please be aware that we are tax experts and we are here to assist you by providing tax advice. 

Tax advice is just that, sharing how we interpret tax laws so that you, the consumer, don't get a letter from the IRS. 

With that said, the IRS created Form 1099-NEC a couple years ago. Before that, payments were lumped into Form 1099-MISC which covered Self-Employment as well as a whole array of other type of payments. The IRS wants income that conforms to being treated as Self-Employment CLEAR, so payers, such as Amazon, are instructed to use Form 1099-NEC (Non-Employee Compensation) for payments made to Sub-Contractors. These are payments that are considered Self-Employment compensation, paid to "non-employees". 

Mistakes happen and income could be reported incorrectly by the Payer, so there is a way for a 1099-NEC to be treated as "Hobby Income" if the income is not for work, but rather a hobby. 

Instructions for entering the 1099-NEC so that it shows as hobby income is listed below. 

This will put it on Schedule 1 as you requested above. 

Be aware that if the 1099-NEC is reported as Hobby Income the IRS might look at your return more closely. 

Here is how the IRS describes a hobby. 

Reporting the income as a hobby means you will pay Income tax, but not Self-Employment Tax on that income. 

There is no legitimate "Adjustment", such as depreciation, that you can make to the income if you report it as Hobby Income rather than Self-Employment, it just isn't in the tax code. Only a Self-Employed Taxpayer can use expenses and depreciation. 

You might want to think about whether reviewing products for Amazon is worth the hassle. 

1. Wages & Income 
2. Other Common Income (BELOW Self-Employment NOT IN THE SELF-EMPLOYMENT SECTION)
3. Form 1099-NEC    Start
4. Add 1099-NEC 
5. Enter the 1099-NEC
6. Select “This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby
7. DONE 

[SRS23]

Thanks! Understood, appreciate the insight.

[mckernan75]

Thanks! I’m in the same situation as well. As a fellow Vine reviewer, it’s frustrating that these products are given to Amazon for free yet we are given a 1099 for them. It’s also frustrating that these Estimated Taxable Value of the item we receive which is deemed as “compensation,” can be a debated amount as Amazon sometimes compensates reviewer full price of the item but then when you look at the listing, they have a sale on it where if I was to purchase it outright, it would be 50% off- just an example. We don’t get the sale price. We do have the option to decline though but that means we miss out on the chance to review a potentially really good item. It stinks. What I don’t understand is if our reviews are being marked as “Amazon Vine Customer Review of Free Product,” why are we receiving a 1099, non-employee compensation, especially when the sellers give the product to Amazon for free? 

[SusanY1]

They are giving you a 1099-NEC because it's required by law.  

When you review the items, you are providing a service in exchange for something of value. 

 This is "compensation" (or "work") under US tax law and it is why you are taxed on the income the same as any other contract worker.   Tax law does not distinguish much between cash and non-cash compensation.  It does not matter if Amazon or another party funds that compensation.  In the end, you are the person being compensated and that compensation is taxable.   

This type of compensation requires that you report the income as a "business" or self-employment income, even though it doesn't meet all of the traditional hallmarks of a business in the common way of thinking.  That's true for many self-employment endeavors. 

The marker on Amazon that you're reviewing "free products" doesn't have anything to do with the tax law but likely addresses other regulations that Amazon is required to follow that require that they identify reviews where the reviewer is compensated.  

If an item regularly sells for less than the value assigned to it for your compensation, you  may be able to make some manual adjustments to the prices on your Schedule C - but this should be done with some caution. 

 If you do this, you should plan to keep detailed records of the price of the item over time (you pay want to print out the listing with the lower prices over a period of a few months to show that its value was less than what was stated in your tax documents.)  This will help bolster your claim to adjust the income for that item.  

Participants in programs such as this should weigh whether or not the tax obligations and reporting responsibilities that go along with it are worth the value of program participation. 

 @mckernan75