How should it be reported, as I consider it hobby income? (Amazon Gift Cards)

Question

On the QuickThoughts app, I accumulated money through surveys that were under $400, which I received in Virtual Amazon Gift Cards that can only be redeemed on Amazon.  Overall, I can't reserve any cash from the money earned from QuickThoughts because it was obtained in Virtual Amazon Gift Cards, which limits my ability to pay self-employment tax if it's necessary. Note: If QuickThoughts users receive $600 or more in a calendar year, they ask for a W-9 and send a 1099-NEC by mail. How should it be reported, as I consider it hobby income?

DennisR · Answer

Whether the income can be determined as hobby income or as self-employment income usually comes down to one thing: the profit motive. The profit motive is not simply whether you made income from the activity, but did you engage in the activity to specifically earn income, did the activity engaged in have expenditures, possible loss, records, or other factors that could classify it was business or self-employment income, etc. Essentially, there has to be other factors to indicate the existence of the profit motive other than income received.

Hobby income will be reported on Schedule 1, Line 8j.

For specified instructions on a 1099-NEC reporting Hobby income and how to enter it in our software, you can sign into your account and contact support.

CoryF · Answer

Thank you for joining our community, CordariusMay.

Hobby income is reportable as Other Income on your tax return. The Virtual Gift cards do count as income the same as receiving actual cash as you are receiving a benefit (income) constructively. In this case, the $400 will just increase your taxable income. You will not owe any self-employment tax.

Had you received a 1099-NEC, this income would be assigned as Self-Employment income raising taxable income and self-employment income for tax purposes.