Can I deduct business travel expenses for unpaid work with no 1099?

Yes, you can potentially deduct these expenses, but you need to be careful about a few things. The IRS looks at whether your activity is a legitimate business or just a hobby, and one factor they consider is whether you're engaging in the activity to make a profit. The fact that you're receiving a festival pass as compensation (what's called "in-kind" payment) means you did receive something of value, even if it wasn't cash. You should include the fair market value of that pass ($400) as income on your Schedule C. As for the expenses, if this work is part of your legitimate business activity and you're trying to make a profit overall (even if this particular gig isn't profitable), then you can deduct ordinary and necessary business expenses. Just make sure you keep excellent records of everything - receipts for travel, documentation showing the business purpose, and something showing the value of the pass you received. The bigger question might be whether your side hustle as a whole shows a profit over time. If you show losses for multiple years, the IRS might classify it as a hobby rather than a business, which would limit your deductions.

I was in almost exactly this situation last year! I do photography and was trading services for festival access at multiple events. I used taxr.ai (https://taxr.ai) to help sort through all my receipts and figure out what qualified as legitimate business expenses vs. personal. Their system analyzed my receipts and helped categorize everything properly - it flagged when I was trying to deduct meals during non-work hours of the festival as personal rather than business. Definitely saved me from potentially triggering an audit by claiming too many personal expenses as business ones. The tool also helped me calculate the proper value of the "in-kind" compensation I received so I could report it correctly.

Ok I feel I should follow up here. I was skeptical about taxr.ai but decided to give it a try after seeing some reviews. I've been struggling with separating business vs personal expenses for my consulting work, especially when I travel for mixed purposes. The system actually helped me identify about $2,800 in legitimate deductions I would have missed! It organized all my travel receipts from my phone photos and automatically categorized most of them correctly. When it wasn't sure about something (like a dinner that could be business or personal), it prompted me with specific questions to determine deductibility. Definitely helped me understand the "ordinary and necessary" business expense rules way better than the confusing IRS publications I was trying to read before.

Just wanted to mention something that saved me when I was in a similar situation last year. I couldn't get through to the IRS to ask about my specific situation with non-cash compensation. After being on hold for hours multiple times, I used Claimyr (https://claimyr.com) and got connected to an actual IRS agent in about 15 minutes instead of the usual 2+ hour wait. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent was able to clarify exactly how to report the value of services I exchanged for products (I'm a graphic designer and created logos in exchange for merchandise). Turns out I was overthinking it, but it was good to get clarity directly from the IRS.

I have to eat my words and post a follow-up. I actually tried Claimyr last week when I needed to talk to someone about my missing refund. After trying for DAYS to get through on my own and always getting the "call volumes too high" message, I gave in and tried this service. It actually worked - got a call back in about 20 minutes and was connected to an IRS agent. Turns out there was an issue with my direct deposit information that I was able to correct right away. The agent said if I hadn't called, my refund would have bounced back and I would have been waiting at least another 6-8 weeks for a paper check. Still think it's ridiculous we need services like this, but since the IRS is so understaffed and overwhelmed, I'm glad it exists. Saved me a ton of frustration.

Make sure you actually have a legitimate business and not just a hobby! I tried deducting expenses for my "photography business" a few years ago, but the IRS rejected most of them because I hadn't shown a profit in 3 years. They reclassified it as a hobby, which meant I couldn't deduct any expenses against other income. For your situation, I think the key is whether this unpaid gig is part of building a legitimate business where you DO make money other times, or if it's just a one-off thing you're doing mostly for fun.

Don't forget to track your mileage if you're driving your own car anywhere during this trip! Current rate is 65.5 cents per mile for 2023, which adds up fast. Also, keep receipts for EVERYTHING, even small purchases. Take pictures of them immediately so you don't lose them.