Please help.
Thanks in advance
Hello c_1,
If you have determined this income is Hobby Income, it is typically reported under "Other Income" and not subject to self employment taxes. You would typically only enter the amount on the Hobby Income line, not the form name.
When entered under the Other Income > Hobby Income line, it is reported on the IRS form 1040 Schedule 1, line 8j: Activity not engaged in for profit income.
The IRS form instructions on Publication 525 state the following:
"Activity not for profit. You must include on your return income from an activity, even if you don't expect to make a profit from that activity. An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Enter this income on Schedule 1 (Form 1040), line 8j."
This can be located on page 32, middle column under Other Income: https://www.irs.gov/pub/irs-pdf/p525.pdf
If you need guidelines to help you determine if it is considered Hobby Income:
https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses
Yes, agree that reporting under Hobby income results in values to populate in 1040 Sch.1, line 8j, the correct place for hobby income; and MISC income ends up on line 8z. The concern is with the existence of the 1099-NEC. Without being able to indicate that line 8j is from a 1099-NEC, won't the IRS treat the 1099-NEC income as separate, and has not been reported? Unlikely that they will presume line 8j is from the 1099-NEC just because the amounts are the same.
1099-NEC instructions, 3rd paragraph:
"If you are not an employee but the amount in box 1 is not self-employment (SE) income (for example, it is income from a sporadic activity or a hobby), report the amount shown in box 1 on the “Other income” line (on Schedule 1 (Form 1040))".
And that happens to be line 8z, on Schedule 1 (Form 1040). The same line that gets populated if entering as Miscellaneous Income, not Hobby Income.
Miscellaneous Income does mention bartering, which may apply to Amazon Vine, but that still brings up SE/business/Schedule C as well as 1099-B. Amazon should probably use a 1099-MISC instead, but that's another discussion.
Amazon and IRS sure know how to make things clear as mud.
So I guess the question is how to report 1099-NEC income NOT as self-employment/business income, and still acknowledge it's from a 1099-NEC?
What have you other Viners done? I know many have gone the Hobby income route, but how (specifically) did you go about it?
Thanks, that is helpful about declaring ot a hobby.
My concern is not only whether Vine income can be reported as hobby/other income instead of self-employment income. The bigger issue is that the 1099-NEC amount itself appears to overstate the real FMV of what was received.
Amazon Vine items are treated on the 1099 as if they are normal retail products, but they are not really equivalent to normal retail products. They have no manufacturer warranty, are non-returnable, may arrive with damaged or blemished packaging, and must be held for 6 months before they can be sold or given away. By that point, many of the same specific products have dropped dramatically in price.
In many cases, the listed Vine value also appears temporarily inflated at the time of selection and does not reflect coupons, discounts, or limited-time offers available to regular buyers.
Because of all that, it seems almost impossible to operate Vine as a real for-profit business. Even if I wanted to sell items later, I usually could not sell them for a profit; at best, I would be selling at a loss just to declutter.
So my question is really twofold:
1. Can this still reasonably be treated as hobby/other income even though I got carried away thinking I was receiving good values and ended up with an Amazon 1099-NEC of about $33,000 for last year?
2. Can the reported 1099-NEC amount be adjusted to a lower FMV when the listed value does not reflect the actual condition, restrictions, lack of warranty, lack of returns, 6-month holding period, and real-world resale value of the items received?
Hi Leeb,
See this article about reporting income from an online product review, like Vine. We wrote this article in response to this particular discussion because of the complications you mentioned. 1099-NEC income appears to be overstated, products are overvalued, damaged, etc.
https://community.freetaxusa.com/kb/articles/317-reporting-income-from-an-online-product-review-business?
1. Yes, you may still treat this as hobby income. You may need to do some accounting to report your expenses and then just report the net income as hobby income. Keep in mind the IRS may send you a notice or letter asking where the 1099-NEC income was reported if you do not report a Schedule C.
2. You do NOT adjust the amount reported on the NEC. You need to make the adjustment on the Schedule C. Read the article below for examples.
Go and read the article and if you still have question, please reply again to this discussion.
