I know a family that was chosen to work on a broadcast ratings panel. They get a small payment each week just for being on the panel, and another small payment if they wear their monitor enough. Total per person receipt is less than 250 dollars per year.
How should they report this income. Schedule C? Other income? Somewhere else? Don't bother?
Other Income, Line 21 of 1040. This makes the income not subject to SE tax (about 15.3%), which would be the case if it was on Schedule C. Other Income is for income from a hobby or something that you do not periodically enough for it to be a job.
I would argue this is SE income. So it should go on Sch C.
If the total Sch C income is only 250 the amount of SE is zero.
It's not a regular job. If it's true that it goes on Schedule C, then the person can also deduct expenses, which here might be just driving. If a hobby, the deductions go on Schedule A, but because of the limitation of Schedule A deductions there's most likely going to be no deduction at all.
True. Isn't the limit 400 though?
I think it's good to get the form right because next year he might earn $600, and then SE tax does come into play. So good to be consistent.
Which is not a requirement.
600 is the threshold for having to issue a 1099Misc.SE tax is in play when the Schedule SE line labeled Net Income from Self Employment is over 400. Net income from SE is net schedule C profit times a fudge factor.
If they're getting a small payment every week, how much more periodic would it have to be before you considered it a job. The fact that the payment is small is irrelevant except that the total might not rise to the level where SE tax is due.
Ira Smilovitz
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