Yes. If this is not a business, you are not engaged in the activity for a profit seeking venture and you consider it a hobby then you can treat it and list it as a hobby. As a hobby any expenses involved with it would be used on itemized deductions if you can use that. These expenses would be subject to a 2% reduction of the adjusted gross income (AGI) and only the excess would be added to your other itemized deductions.
The dollar amount and volume of time spent on this could be a factor in determining if you are engaged in this activity for profit. The fact the value is for products, as you see from the Form 1099, as opposed to cash under the tax law Amazon is required to report it.
- To record hobby income in TurboTax Self Employed follow these steps.
- My Account > Tools > Topic Search > Type hobby income > Go
- Enter your hobby income and expense
- Click the screenshots attached to view and enlarge for assistance.
What could possibly be "any actual expenses that are ordinary and necessary for you to receive and keep the products to the extent of the income value." I just started as an Amazon Vine reviewer, and I am looking ahead to see if I incur more than $600 in ETV, and I declare it as business income, what deductions can you take to reduce the income?
I don't see anything in IRS publications that would indicate any specific income limit for income to be from a hobby. You can see what the IRS looks at when determining whether income is from a business or a hobby using this link: https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses
As of tax year 2018, expenses associated with hobby income are no longer deductible on your tax return. The previous deduction described in the first answer to this post was eliminated with the 2018 tax law.
If you receive a 1099-MISC, you must enter it on your tax return. How TurboTax will enter it depends on how you answer the questions in the interview. If they are hobby type answers, TurboTax will enter it as hobby income and it will be shown on line 21 of Schedule 1 and on line 6 of form 1040.
If you treat it as a small business, you ought to be able to claim some business expenses. For instance, you wouldn't be able to do that review job without a computer of some sort. So depending on the age, you might be able to claim it's depreciation value. The area of your house where you store the products, anything you buy in order to use the products (batteries, for instance, or gas for a lawnmower) count as a business expense. If you bought a camera to take review photos, that is a business related expense. The key is that it has to be something you bought just for that business of reviewing. If you use the camera for family photos too, then you have to go through the 'what percent of the time is this used for work and for non work' and that gets pretty tedious to prove. Keep receipts.
A hobby is other income and the expenses quit being deductible in 2018. Here is the official IRS word, Tips for taxpayers who make money from a hobby
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If it were a one-off, you might get away with other income, but you are doing this on a continuing basis. If you are going to do this and get paid for it, it is self-employment income.
You don't get a cash paymwnt though for doing reviews. You basically get sent a product, you write a review, and then you keep the product. The 1099 is just for what they claim the value of the items is. No money ever exchanges hands though. I do testing for best buy and have gotten about $12,000 worth of free stuff this year in exchange for my reviews. I plan to claim it as hobby income. Should I be worried?
Ive been a reviewer for Best Buy for years and I have been doing it under hobby income every year and haven't had any problems so far (knock on wood) Usually I have anywhere from $5000-$10000 on my MISC form each year.