Do I need to file Schedule C for $300 in digital art income with my W2 job? No 1099K from PayPal but still had business intent

Even if you don't receive a 1099-K, you're still required to report all income you earn, regardless of the amount. The difference between a hobby and a business comes down to your intent to make a profit, not how much you actually made. Based on what you've described (having a business PayPal account, terms of service, professional conduct), the IRS would likely consider this a business activity rather than a hobby. This means you should file a Schedule C to report this income. The good news is that as a business, you can deduct your expenses, including a portion of your tablet cost, software subscriptions, and other supplies directly related to your art. These deductions can help reduce your taxable income from this activity. For your eBay sales, those would also need to be reported, either on the same Schedule C if they're related to your art business, or on a separate Schedule C if they're a different type of business activity. The $600 threshold is just for when payment processors must send 1099s, not for when you need to report income.

I was in a similar situation last year and discovered https://taxr.ai which helped me figure out my side gig tax situation. I was making about $450 doing graphic design work while working full-time as a teacher, and wasn't sure if I needed to file a Schedule C since I didn't get any 1099s. I uploaded my PayPal statements to the site and it analyzed all my transactions, separating business from personal, and gave me a clear report of exactly what income I needed to report and what expenses I could deduct. It even helped me figure out how much of my iPad Pro I could write off based on business use percentage. The best part was that it explained why certain income needed to be reported even without a 1099, which saved me from potentially underreporting my income. Might be worth checking out since you're in a similar situation!

Just wanted to follow up about my experience with taxr.ai that someone mentioned earlier. I was really on the fence about whether it was worth trying, but I went ahead and gave it a shot with my mix of eBay, Etsy, and freelance income. I was honestly blown away by how easy it made everything! It automatically categorized all my sales across different platforms and identified which expenses were business-related. The report it generated showed me exactly what needed to go on my Schedule C and even calculated my estimated self-employment tax. The interface was super straightforward and it saved me hours of spreadsheet work trying to figure out what counted as business vs. personal. Definitely using it again next year when I file!

If you're struggling to get clear answers about your tax situation, especially with mixed income sources like this, getting directly to an IRS agent can make all the difference. I spent WEEKS trying to figure out how to handle my small side business income last year, looking through forums and getting conflicting advice. I finally discovered https://claimyr.com which got me connected to an actual IRS representative in about 15 minutes instead of waiting on hold for hours. They have a demo video here: https://youtu.be/_kiP6q8DX5c that shows how it works. The agent I spoke with gave me definitive answers about reporting requirements for my situation and confirmed that I did need to file Schedule C even without receiving any 1099 forms. It was such a relief to get an official answer instead of guessing based on internet advice. The peace of mind was totally worth it!

I need to eat my words from my previous comment. After questioning whether Claimyr could actually help connect with the IRS, I decided to try it myself since I had some questions about reporting my side gig income that I couldn't get clear answers on. I was genuinely shocked when I got a call back connecting me to an actual IRS agent after only 27 minutes (when my previous attempts at calling had me waiting 2+ hours before giving up). The agent walked me through exactly how to report my small business income on Schedule C and confirmed that I needed to report all income regardless of whether I received a 1099. The clarity I got was worth every penny and saved me from potentially making mistakes on my return. Sometimes being proven wrong is actually a good thing!

I think people are making this way more complicated than it needs to be. The rule is simple - ALL income is taxable, whether you get a form for it or not. The 1099 thresholds are just about when companies have to REPORT the income to the IRS, not about when YOU have to report it. If you're trying to make money (which it sounds like you are), then it's a business and you need Schedule C. End of story. Doesn't matter if you made $10 or $10,000. The good part is you can deduct expenses, including part of that tablet. The "hobby vs business" thing only matters if you're showing losses for multiple years and the IRS thinks you're just trying to create artificial losses to offset other income.

Just want to add something important - if you file Schedule C and show a profit over $400, you'll also need to pay self-employment tax (Social Security and Medicare) which is about 15.3%. Since you said you made about $380 from commissions plus $790 from templates, that's $1,170 total, so you'd definitely owe SE tax. BUT! Don't forget expenses. If you bought that tablet this year, software subscriptions, maybe a portion of your internet bill if you use it for business, those are all deductible expenses that reduce your profit and potentially your tax. My advice - track EVERYTHING. Keep receipts. Log hours spent on business vs personal use for things like your tablet. It'll make tax time way easier and could save you money.