Legally, yes you do need to report it as income . . . if you are otherwise filing an tax return, or if this $500 in tutoring fees puts you over the filing threshold (i.e., the maximum amount of income you can have without being required to file, by law). Please see Pages 2 through 5 of IRS Publication 501 for details on those filing threshold rules. Here is a courtesy link to that document:
https://www.irs.gov/pub/irs-pdf/p501.pdf
That said, you'll need to file Schedule C (Form 1040), Profit or Loss From Business, as a self-employed person. Yes, tutoring is normally an activity that is classified by the IRS as self-employment, because you don't receive a W-2 from an employer for doing it. Along with Schedule C, there is usually as Schedule SE for self-employment taxes (basically your share of Social Security and Medicare contributions) as well.
These
forms must be completed and
included with your income tax return, to report the $500. TurboTax will automatically fill out the necessary paperwork, if you go through the regular interview and answer the questions appropriately. If you have no self-employment expenses to declare, then you can complete Schedules C and SE in TurboTax online Deluxe. If you wish to report business expenses as a reduction to business income, then you will need the TurboTax online Self-Employment program. (You would be prompted to upgrade from within the software, if necessary.)
Aside from finding the self-employment data entry section of TurboTax by working your way through the normal taxpayer interview, you can also jump there directly. To do so simply have your tax return open, and locate the Find / Search box on your screen.
Next, if you were paid in cash, by check, or by any other means, and you don't have a Form 1099-MISC from anyone, then enter the exact search words "self-employed" into the box and click the button. If you were instead paid in such as way as you did receive a Form 1099-MISC, you will replace the words 'self-employed' with "1099-misc nonemployee compensation" and click the button.
Whichever selection is applicable to you should bring up a Jump To link directly below it. Click on that and you'll be taken to the appropriate place in the TurboTax program. Please see the attached screen-capture images at the bottom of this answer for a visual aid (simply click to open).
You may also access the link below for more information about the topic of self-employment income:
http://turbotax.intuit.com/support/go/GEN85327
If you have further
questions, encounter any difficulties, or just want to speak with a live tax
expert who can walk you through your TurboTax entries (including the ability to
screen-share with your computer), please feel free to contact us. We
would be happy to help you (and as a paying customer, the call is free to you).
Here is a link where you can create a support ticket and reach us:
https://support.turbotax.intuit.com/contact/
Thank you for asking this question.
