Amazon Vine 1099-NEC Effect on Federal Refund

[Ross321]

First document I entered was the 1099-NEC I received from Amazon as a part of their Vine program.  The listed amount was about $1,100. 

At the time TurboTax was showing a refund due from Federal.  When I entered the 1099-NEC, the refund amount went down.  Calculating the effective tax rate from that one action, the 1099-NEC is being taxed at an effective rate of 36%. 

Does that sound right?  I was expecting to be taxed somewhere in the lower 20's. 

thanks

[xmasbaby0 · Accepted solution]

Income reported on a 1099NEC is self-employment income.  In addition to ordinary income tax, you pay self-employment tax for Social Security and Medicare from that income.

https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

https://turbotax.intuit.com/tax-tools/calculators/self-employed/

[Ross321]

Understood, thank you!

[Ross321]

I've never sold any of the items I received from the Amazon Vine program on Ebay or anywhere else.  I use them all personally.  I have no plans to ever sell any. 

Is this still considered self-employment if zero dollars of income are generated?  It seems more appropriate that this be classified as a "hobby" rather than a "business" given nothing is ever sold and the items are for personal use. 

[Vanessa A · Accepted solution]

  You are "selling" your services of posting reviews to Amazon Vine in exchange for the items you receive for free.  These items have value, so the value of those items are your pay.  Whether or not you are selling something does not determine whether or not it is self-employment or a hobby.  It comes down to your actions and intentions.

Since you are not doing this with the intention of earning a profit, then it would be considered a hobby and you could report this as hobby income instead of self-employment income. To do this, after entering your 1099-NEC you can continue through and select, this is not money earned an an employee or self-employed individual, it is from a sporadic activity or hobby.  This will include it on your return as ordinary income instead of self-employment income. 

If you have already left that section, you can go back clicking Wages and Income, then edit on the summary screen next to the 1099-NEC for Amazon Vine. 

[Ross321]

I will look at that, thanks very much!

[MMartin4]

Thank you for this reply. I'm in a similar situation, participated in Vine programm, done several reviews and I'm using received items for my personal use. I want to use "hobby" option in online Turbo Tax, if I choose it than system does not offer me to enter the income from 1099-NEC, is this normal/expected?  

[JamesG1]

Reporting 1099-NEC income as something other than Schedule C income is not common.

However, to report 1099-NEC information as hobby income or other income follow these steps:

• Select Federal from the left side menu.
• Click on Wages & Income.
• Scroll down to Other Common Income.  Click Show more.
• Click Start / Revisit to the right of 1099-NEC.
• At the screen Describe the reason for this 1099-NEC, enter the reason for this income.
• At the screen Does one of these uncommon situations apply?, select This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby.

The entry will be reported:

• on line 8j of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

@MMartin4 

[Ohlookabunny]

I can't find any of those options. I got paid in goods only, which is a fraction of what it was last year, but it's saying I owe more tax, and there are no other options for a 1099-NEC on the screen. It's charging me extra on top of that for having a business that I don't have. It's either enter a 1099 or tell them I have an activity not for profit. I don't see another alternative. Last year, I was able to report it as hobby income, but that option is gone this year.

[BDLancaster]

They are correct. 

[RobertB4444]

An 'activity not for profit' IS a hobby.

@Ohlookabunny 

[brettmelton]

Thank you. This is very helpful!

[sr3333]

---

@JamesG1 wrote:

Reporting 1099-NEC income as something other than Schedule C income is not common.

However, to report 1099-NEC information as hobby income or other income follow these steps:

• Select Federal from the left side menu.
• Click on Wages & Income.
• Scroll down to Other Common Income.  Click Show more.
• Click Start / Revisit to the right of 1099-NEC.
• At the screen Describe the reason for this 1099-NEC, enter the reason for this income.
• At the screen Does one of these uncommon situations apply?, select This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby.

The entry will be reported:

• on line 8j of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

@MMartin4 

---

when i do report as hobby, do i pay Self employment Taxes? how are the taxes calculated?

based on ordinary income tax bracket?

[DawnC]

Hobby Income is taxed at ordinary income rates - no self-employment taxes are included; the income does not go to Schedule C.   @sr3333 

In general, income reported on 1099-NEC is self-employment.   Self-employment income generates ordinary income taxes + self-employment income taxes (employer and employee portions of SS and Medicare tax).  What are self-employment taxes?  

[ramatsu]

I've completed entering the Amazon Vine 1099NEC info, which is under the self-employment section. But I don't see the option you referenced about "after entering your 1099-NEC you can continue through and select, this is not money earned an an employee or self-employed individual, it is from a sporadic activity or hobby."

Is this still true for 2024? How do you get to the choice to select it?

Thanks!