1099-MISC for hobby income
Larry S. Kramm
profit and not meeting any of the requirements as a
business.
This past year a local news paper paid me amounts totaling
$1100 for some photographs. I received a 1099-MISC for the
payments and it was marked a non-employee compensation.
I entered the 1099-MISC into TurboTax. It asked me if it
was income from business, farm, or wages. There was no
hobby option. Since I don't qualify as a business and I'm
not a farm, I entered wages. Did I do the right thing?
TurboTax put the amount under Wages on my 1040 instead of
other income where I expected it to be. Did TurboTax do the
correct thing?
Larry
lkr...@aol.com
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Gene E. Utterback, EA
> I do photography as a hobby, never ever expecting to make a
> profit and not meeting any of the requirements as a
> business.
>
> This past year a local news paper paid me amounts totaling
> $1100 for some photographs. I received a 1099-MISC for the
> payments and it was marked a non-employee compensation.
>
> I entered the 1099-MISC into TurboTax. It asked me if it
> was income from business, farm, or wages. There was no
> hobby option. Since I don't qualify as a business and I'm
> not a farm, I entered wages. Did I do the right thing?
>
> TurboTax put the amount under Wages on my 1040 instead of
> other income where I expected it to be. Did TurboTax do the
> correct thing?
Turbo tax did what you told it to do, nothing more, nothing
less.
You need to get it to other income and you need to record
your expenses as an adjustment to income, but expenses are
limited to your income.
You also need to be prepared to deal with the IRS notice you
will get indicating that they think you ARE a business.
They WILL think this because of the 1099 you got.
Gene E. Utterback, EA
Marie Murrell
> I do photography as a hobby, never ever expecting to make a
> profit and not meeting any of the requirements as a
> business.
>
> This past year a local news paper paid me amounts totaling
> $1100 for some photographs. I received a 1099-MISC for the
> payments and it was marked a non-employee compensation.
>
> I entered the 1099-MISC into TurboTax. It asked me if it
> was income from business, farm, or wages. There was no
> hobby option. Since I don't qualify as a business and I'm
> not a farm, I entered wages. Did I do the right thing?
NO! You do have a business, like it or not. You can deduct
expenses you had such as mileage, film, developing, etc.
File Schedule C and pay self employment taxes
> TurboTax put the amount under Wages on my 1040 instead of
> other income where I expected it to be. Did TurboTax do the
> correct thing?
Yes based on what you put in! Garbage in Garbage out!
Therese Thomas, EA
self-employed. Your 1099-MISC is a clue. You must report
this on a Sch C where you also report expenses to offset the
income. You pay income taxes AND self-employment (social
security and medicare) taxes on self employment income. If
you put it under wages then you would not have paid the SE
tax, which is required.
--
Therese Thomas, EA
(760) 751-2542 phone/fax line
William P. Brown
> If you earned income from your photography, you are
> self-employed. Your 1099-MISC is a clue. You must report
> this on a Sch C where you also report expenses to offset the
> income. You pay income taxes AND self-employment (social
> security and medicare) taxes on self employment income. If
> you put it under wages then you would not have paid the SE
> tax, which is required.
Hobbies do not generate self employment income and are not
reported on Schedule C. The receipt of a 1099MISC does NOT
create a trade or business on the part of the recipient.
Hobby revenue is reported on the Other income line of Form
1040. Related hobby expenses (but not more than hobby
revenue) are reported on Schedule A as miscellaneous
itemized deductions subject to the 2% of AGI reduction.
Regards,
Bill
~~~~
Associate Professor of Accounting
Longwood University
Department of Accounting, Economics & Finance
http://www.longwood.edu/staff/wpbrown/
Opinions expressed by me are mine, not my employer's.