Hobby income reported via 1099-MISC

[vidhi0007]

My husband reviews products on YouTube as a hobby and received part of his hobby income on 1099-MISC in Box 2 (royalties). Let's say his total hobby income is $1000 but a part of it, lets say, $900 was reported on 1099-MISC and the rest $100 not reported on any 1099.

Turbo tax has a section to fill out 1099-MISC. So I declared the $900 under 1099-MISC. Now, it is asking me the source of 1099-MISC and both the options don't suit my situation. This is neither an investment nor a business but more like a hobby.

a) Investment income from property

b) Royalty income from your business, including artist royalties or operating a natural resources business (Schedule C)

How should I correctly report this 1099-MISC income as I don't want to report this as business income on Schedule C?

[LoganathanB]

Enter the income in box 3 other income.

It will ask you these questions only if you enter the income in boxes 1 or 2

• Open your tax return
• Click on Wages and income
• Search for 1099Misc
• Click on the jump to 1099-misc
• Add 1099 Misc or Edit
• Enter the info from your form into the corresponding boxes.

[vidhi0007]

But I received income in box 2 of 1099 MISC, should I report it incorrectly on a different box?

[LenaH]

No, please enter your income into Box 2 when inputting your 1099-MISC.  On the next screen, choose Investment income from property as this income should be reported on a Schedule E. 

You stated that creating videos on YouTube is more like a hobby, rather than a business. It also is not your primary source of income. In general, royalty income reported in box 2 of the 1099-MISC is reported on Schedule E, unless you are "in the business" of performing a certain activity, and that it is a primary source of income.

This income will flow from your Schedule E to Schedule 1, Line 5. This income will not be subject to self-employment tax, as is the case with hobby income. 

@vidhi0007

[Edited 4/6/22 l 5:12AM PST]

[vidhi0007]

This is not an investment income from property either and I don't think Schedule E is right for hobby income.

There should be a way for turbotax to give a third option to link such income to hobby income instead of investment or business.

[PatriciaV]

There is another way to report Form 1099-MISC as Other Income, which will appear on Form 1040 Line 8.

1. Start in Federal Taxes >> Wages & Income >> Other Common Income >> Income From Form 1099-MISC. Click "Start" and follow the prompts.
2. You will need to report this in Box 3 Other Income in order to avoid Schedule C or Schedule E.
3. After entering the info from the 1099-MISC, continue until you see the question about this being connected to your main job, and say "no." Check only the box for 2021 income. Then answer that this was not an "intent to make a profit." Those three answers should classify this as "Other Income", which will appear on Line 8 on Form 1040.

If you wish to report expenses relating to this income, make another 1099-MISC entry with a negative value in Box 3 (but not more than the income amount). This will offset the income, and you will report only the net on Line 8.

Note that the choice for Royalties (Sch C or Sch E) is defined by the IRS, not TurboTax.

[shanesnh]

I have the same question. When I choose Investment income from property, it wants a description and a location for this "property". What do I put for the description and location as these are royalties that are coming from this YouTube video/Google 1099-MISC? Thanks.

[MWonder]

Hello,

I've reported this type of royalty from Youtube on Schedule E before, considered in my case as a hobby income, not primary source of income.

I did not enter a physical address in Schedule E.

Under type of property I typed in Royalties for Box A and under Income / Royalties received for Box A I enter the amount I received.

Frankly I don't know why this has to be so complicated, but I feel better that I reported it, even for the measely amount it is.  Even if there appear to be different ways of reporting it, not reporting it seems worse, and I can rest easier.

[KrisD15]

You are correct that not reporting any income. but especially income on an IRS form such as Form 1099-MISC, is not a good idea.