, EA, Social Media Tax ExpertTurboTax TaxPro
Hello Buffy14034 -
You do have to report it as income, unfortunately. The IRS will also receive this information and will expect to see it on your tax return.
If the income was compensation for the work you did, it would go on Schedule C (or Schedule C-EZ) unless this was a one-time occurrence. You can deduct any of your out-of-pocket expenses against that income to reduce your tax liability.
If the income was ONLY for the reimbursement of your materials you purchased, it would go on line 21 of the federal Form 1040 and then only be subject to ordinary income taxes and not self-employment taxes. You can deduct your expenses as Hobby Income/Expense.
Increasing your donations to the church would be a charitable contribution and would not reduce any self-employment taxes on the income. It would only reduce your overall taxable income if you itemize deductions on Schedule A.
You are also considered self-employed (for tax purposes, anyway) if you engage in business-like activities, even if you don't think of these as a formal business.
The key factors that determine if your activities constitute a business are:
- You intend to make a profit (even if you operate at a loss);
- Your activities are regular;
- You make efforts to sustain or grow your business.
The following examples are not considered businesses.
- You got paid to mow someone's lawn once
- You were paid to give a speech once at a seminar and will not do it again
- A friend paid you to paint their house but you do not paint houses for a living and will not paint anyone else’s house for income
On the other hand, if you, for instance, mow lawns every weekend and advertise your services, that would be considered a business.
Let me know if you need more assistance.
I hope you found this information helpful!
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