How do I file a hobby expense but with loss? I get free Items from Amazon to test. I don't resell these. It totals 30k and I can't afford to pay these taxes. Help please

[kendrasuiyuet]

It's called Amazon Vine, they give you a 1099-NEC form. I usually don't owe money and this is added in with my total income now -_- I suppose I could try to sell these items to be able to pay these taxes, but then it would be a business....

[ColeenD3]

You can't take hobby expenses. You would have to sell them to have a business.

[kendrasuiyuet]

@ColeenD3  I’m given these items free from Amazon to review. I don’t sell them, it is not a business. I make no money from this. 

[ColeenD3]

Right, as you said, it's a hobby. You can't take hobby expenses. They were eliminated with TCJA in 2017.

[kendrasuiyuet]

So what do I do? I can enter the amount in hobby expenses… I’m just not sure if this is the way to go…

[Vanessa A]

You would report the hobby income by taking the steps below.  As mentioned above, the income is taxable, but the expenses are not deductible.  

• Federal
• Income and Expenses
• Scroll down to Less Common Income and click Show More
• Start next to Miscellaneous Income
• Start next to Other Reportable Income

This will put it on line 8z of your schedule 1 as other income. 

[kendrasuiyuet]

Thanks @Vanessa A  So what you’re saying is that even though this is hobby income and I don’t seek these items that I will have to pay taxes on 20k worth of free items? 

[kendrasuiyuet]

Can this taxable I come be submitted but also can I fill out a Michigan Form 5674 NOL for the amount as I make no profit for this at all

[ErnieS0]

No, you are not able to use Mi Form 5674 for hobby income. Michigan follows federal rules. A hobby can’t be a hobby for federal and a business for Michigan.

Michigan says a net operating loss occurs when a business loss exceed income in a particular year. 

Application for Michigan Net Operating Loss Refund

[worlow9026]

On turbo tax deluxe where do i report hobby expense. 

[worlow9026]

Received a 1099k from ebay with total on box 1a 7889.35  (gross amount of payment on sales) how do i deduct the fees that ebay take out of for the service.  My Total cost was 8600.00.how do i file it on turbo tax

[DaveF1006]

If this activity on your 1099K is strictly a hobby, here is how to report your 1099K Hobby income.

1. Sign in to your TurboTax account.
2. Click on Federal Taxes tab.
3. Choose Wages and Income.
4. Scroll down to Other Common Income
5. Select 1099K
6. As you navigate through the screen, here will be a check box in the section where you will select Hobby income.  enter the full amount of your hobby income.

Now here is how to enter the expenses for your Hobby income. Do not enter expenses that are more than your hobby income.

1. Click on Federal Taxes tab.
2. Choose Wages and Income.
3. Scroll down to Less Common Income and click Start to to right of Miscellaneous Income, 1099-A, 1099-C.
4. Go to other reportable income
5. When you get to the description box, give it a description such as 1099K- hobby expenses and then enter the expenses with a minus sign in front of the number. This will report as a negative number that will offset some of your income.

@worlow9026 

[munstermoon]

I have an Amazon Vine user agreement to review products and receive a 1099-NEC. I do not do this as a business to earn income; however, I received products to review that were defective so I would like to deduct these items from the "Nonemployee compensation" Line 1 amount on the 1099-NEC.

Does your method outlined above with a 1099-K work for this situation?

Thank You!

[JamesG1]

The method outlined by @DaveF1006 may be used.

Rather than reporting income from an IRS form 1099-K, in TurboTax Online, report the IRS form 1099-NEC income as follows:

• Select Federal down the left side of the screen.
• Select Wages & Income down the left side of the screen.
• Scroll down to Other Common income and click on the down arrow.
• Select Start/Revisit to the right of Form 1099-NEC
• Enter the information about the Form 1099-NEC.
• 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 8z of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

Make sure that your personal tax records can show that the activity is a hobby should the IRS have a question at a later time.  See also here.