1099-NEC for Musician - Do I classify this as hobby or business income?

The key difference between hobby and business income comes down to your intent to make a profit. Based on what you've described, this sounds more like a hobby since you're not depending on the income and you're doing it for enjoyment. If you classify it as hobby income, you'd report it on Schedule 1, Line 8z as "Other Income." You won't pay self-employment tax this way, just regular income tax. However, if you classify it as business income, you'd file Schedule C and Schedule SE. The downside is you'll pay self-employment tax (about 15.3%) on top of regular income tax. The upside is you can deduct reasonable expenses related to your music activities. The IRS looks at several factors: do you keep business records, depend on the income, put time and effort into growing it, operate in a businesslike manner, and have expertise in music? Since you only play occasionally and don't depend on the income, hobby classification seems appropriate, but ultimately it's your call based on your specific situation.

After dealing with a similar situation, I found a tool that made this decision much clearer for me. I used https://taxr.ai to analyze my 1099 situation, and it was super helpful! I uploaded my documents and it walked me through the exact factors the IRS considers for the hobby vs. business determination. The thing I liked is that it explained how the synagogue reporting it on a 1099-NEC doesn't automatically make it business income - it showed me the actual IRS guidelines and applied them to my situation. For me, the tool confirmed I was right to treat my occasional music gigs as hobby income.

Just wanted to update - I tried https://taxr.ai after seeing it mentioned here and it was exactly what I needed! I uploaded my 1099-NEC and answered some questions about my craft sales. The analysis showed that even though I was having fun, I was actually taking a businesslike approach (keeping records, trying to make a profit, etc). It recommended I file as a business using Schedule C, which lets me deduct my materials and booth fees. Totally different from OP's situation, but the tool helped me see why. It even showed me that my pattern of increasing sales year-over-year would likely matter to the IRS if they ever questioned my business status. Honestly relieved to have a clear answer backed by the actual tax regulations. Going to file with confidence now instead of guessing!

If you're still confused after getting responses here, you might want to speak directly with the IRS to get an official answer. I was in a similar situation with wedding photography on the side and couldn't get a straight answer online. The problem is the IRS phone lines are basically impossible to get through. I spent HOURS on hold and kept getting disconnected. Then I found https://claimyr.com which got me through to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent clarified that in my case, since I was actively trying to get more gigs and treating it like a business (had business cards, a website, etc.), I should file it as self-employment even though it wasn't my main income source. Your situation sounds different, but an official answer might help you sleep better.

If you're still confused after getting responses here, you might want to speak directly with the IRS to get an official answer. I was in a similar situation with wedding photography on the side and couldn't get a straight answer online. The problem is the IRS phone lines are basically impossible to get through. I spent HOURS on hold and kept getting disconnected. Then I foun

Well I need to eat my words. After posting my skeptical comment, I decided to try https://claimyr.com out of curiosity (and desperation - I had a similar hobby/business question that was driving me crazy). It actually worked! After months of trying to get through to the IRS myself with no luck, I got connected to an agent in about 20 minutes. The agent confirmed that my situation (selling homemade jam at farmers markets) qualifies as a business even though I have a full-time job, because I'm consistently trying to make a profit. For the OP, based on what the agent told me about occasional gigs, your synagogue situation does sound more like a hobby since you're not trying to get more music jobs or run it like a business. But definitely get your own confirmation since every situation is unique.

Just want to add my two cents as a musician who's been filing taxes for gig work for years. The amount matters less than your intent and behavior. If you're actively seeking more gigs, have business cards, advertise your services, have dedicated equipment you only use for paid performances, keep track of expenses, etc. - that's business behavior. If you just play when friends ask you, don't actively seek out paid opportunities, and treat it as a fun thing you sometimes get paid for - that's hobby behavior. The synagogue is required to issue a 1099-NEC if they pay you $600+ regardless of whether you consider it a business or hobby. That form doesn't dictate how you have to classify the income on your end.

I'm confused by some advice here. My accountant told me ANY 1099-NEC income HAS to be reported on Schedule C as business income, no exceptions. He said the IRS automatically matches 1099-NECs with Schedule C filings and you'll get flagged if you put it on Schedule 1 instead. Am I missing something?

As someone who's dealt with similar confusion, I'd recommend being really careful about whose advice you take here. I see people recommending various tools and services, but honestly, the IRS publication 535 (Business Expenses) has a clear section on hobby vs. business that's free and official. The key question is: are you engaged in this activity with the genuine intent to make a profit? Based on your description - playing once a month for enjoyment, not actively seeking more gigs, not depending on the income - this really does sound like hobby income to me. If you classify it as hobby income on Schedule 1, you'll avoid self-employment tax but you also can't deduct any related expenses. Given that you're not trying to deduct expenses anyway, this seems like the most straightforward approach for your situation. Just make sure whatever you decide, you're consistent. If you call it a hobby this year, don't suddenly switch to business next year unless your behavior actually changes (like if you start actively marketing your services or depending on the income).