How to File Amazon Vine on tax returns
Hi Tax Experts,
I’m looking for clarification on how to handle the Amazon Vine program for my tax return. Participants receive products in exchange for reviews, and I’ve received a 1099 form for the fair market value of the items.
The confusion lies in how to classify this activity: Is it considered a hobby or something else, like self-employment? I’ve seen so many conflicting answers online.
If it’s a hobby, do I just report the income without deductions? And if it’s not a hobby, how do I handle it? Are there any deductions I can claim for related expenses, or does the IRS view the whole thing differently?
I’d love to hear how others are navigating this or what the general consensus is. Thanks in advance!
Answers
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You will report the income as Self-Employed Income. Your 1099 should be entered and attached to Self-Employment Income. Then, our software will automatically generate the Schedule C reporting the Self-Employed Income.
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Thank you for the response!
If I don’t operate an official business and just participate in the Amazon Vine program casually, would it be incorrect to file this as Hobby Income instead of Self-Employed Income? I’ve seen some discussions suggesting that without regular business activity or intent to profit, it might qualify as a hobby.
Are there specific criteria or risks I should consider when choosing one classification over the other? I want to make sure I file it correctly and avoid any issues with the IRS.
Thanks again!
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Hi Boni,
The IRS states that an activity is a business if:
- Your primary purpose for engaging in the activity is for income or profit.
- You are involved in the activity with continuity and regularity.
This is something you will need to determine, based on your activity. Generally though, Amazon Vine income will need to be reported as business income on a Schedule C. You don't need to have an official business to file a Schedule C.
As for risks, it is possible for the IRS to reclassify your income if they disagree with it being treated as hobby (or business) income. I suggest that you document your reasons for classifying the income one way or the other, then keep that documentation with your personal tax records.
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Thank you for the explanation. After considering the IRS criteria, I’m leaning towards filing my Amazon Vine income as hobby income since I don’t use it as a primary purpose of income or profit and don’t operate this as a business.
If I file it as hobby income, are there any significant differences or implications for my tax return that I should be aware of compared to reporting it on a Schedule C? For example, would this impact deductions or how the income is taxed?
I’d appreciate your insight to ensure I’m approaching this correctly. Thank you!
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Yes, the reporting will be different if you file it as hobby income. To report hobby income on a 2024 return, log into your account and go to Income > Uncommon Income > Other Income. There is a "Hobby Income" option on that screen. Reporting it there will result in your income being reported directly on your Schedule 1, line 8j.
IRS Publication 525 states on page 32 that deductions for the related expenses cannot be more than the income you report and also can only be taken if you itemize your deductions on Schedule A. Hobby income is subject to normal income tax, but not subject to self-employment tax.
Alternatively, for Schedule C business income, your expenses are not limited, so if you had more expenses than income, you can realize a net loss on the business activity. Schedule C income is subject to self-employment tax.
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Rachels,
Thank you for the detailed explanation! Based on my specific situation, I intend to file my Amazon Vine income as hobby income because it minimizes my tax liability. Here’s why:
- Filing jointly: My spouse and I have a combined AGI of $140,000.
- Standard deduction: Since we’re taking the standard deduction, I wouldn’t be able to itemize deductions for any hobby-related expenses anyway.
- No expenses: I don’t have any significant expenses related to the activity to deduct.
- Avoiding self-employment tax: Filing as hobby income avoids the additional 15.3% self-employment tax that applies to Schedule C business income.
Given these factors, filing as hobby income works better for me because it reduces my overall tax burden. Of course, I’ll ensure I keep records in case the IRS questions my classification.
Thanks again for helping clarify the differences!
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You are welcome. Have a wonderful day!
