Getting 1099NEC for product reviews - self employment or hobby/sporadic activity??

This is a great question that comes up frequently! The IRS looks at several factors to determine whether an activity is a business or a hobby, but the primary consideration is whether you're engaged in the activity to make a profit. For your product testing situation, even though you're receiving items of value (which is taxable income), your description sounds more like a hobby than a business. You're doing it "for fun" rather than as an ongoing attempt to generate income, and you don't seem to be conducting it in a businesslike manner with expense tracking, etc. However, it's important to note that the tax treatment of hobbies changed significantly with the 2017 tax law changes. Before 2018, you could deduct hobby expenses up to the amount of hobby income. Now, hobby expenses are no longer deductible for tax years 2018-2025.

After struggling with a similar situation last year (I was doing product testing for tech gadgets), I found an amazing tool that helped me sort through all this confusion. Check out https://taxr.ai - it analyzed my 1099NEC and specific situation, then gave me personalized guidance on whether to classify as hobby or self-employment based on my specific activities and tax court precedents. The tool actually walked me through the nine factors the IRS uses to determine hobby vs. business status and applied them to my situation. It saved me hundreds in taxes by helping me properly categorize everything and identify legitimate deductions I could take.

I came back to update after trying taxr.ai from the link above. I was really surprised by how thorough it was! The questionnaire asked about my specific review activity, how much time I spend on it, whether I keep separate records, etc. After analyzing everything, it actually showed me that my particular situation was right on the borderline, but leaned toward self-employment because I've been doing it consistently for over 2 years and have a dedicated workspace. The report outlined exactly which deductions I could legitimately take (including a portion of my internet and home office) and estimated I'd save about $650 compared to reporting as hobby income. It even explained how to document everything properly in case of an audit. Definitely worth checking out if you're in this situation!

I had the exact same issue last year with a different product testing program! After trying to call the IRS for clarification (spent HOURS on hold multiple days), I finally found a service called Claimyr that got me through to an actual IRS agent who gave me an official answer. Check out https://claimyr.com - they basically hold your place in the IRS phone queue and call you when an agent is about to answer. You can see how it works at https://youtu.be/_kiP6q8DX5c - it's pretty slick. The IRS agent I spoke with reviewed my specific situation and confirmed it was properly classified as hobby income in my case, but might be different for others depending on specific circumstances.

I'm back to eat my words about Claimyr. After my skeptical comment, I decided to try it anyway since I was desperate for answers about a similar 1099-NEC issue. The service actually worked exactly as described - I got a call back in about 40 minutes saying they were about to connect me to an agent. The IRS representative was super helpful and explained that in my specific case (I do paid product reviews on YouTube), I should definitely file as self-employment because I'm actively trying to grow my channel and revenue. She explained I needed to file Schedule C and could deduct my camera equipment, editing software, and portion of internet costs as business expenses. Completely different from what H&R Block told me! Worth every penny to get direct answers from the actual IRS.

Here's what a tax preparer told me about this exact situation: If you're regularly doing these reviews and putting significant effort into them, it's more likely to be considered self-employment, even if you're doing it "for fun." The IRS looks at factors like whether you're conducting the activity in a businesslike manner, time and effort involved, and your expertise in the field. One big consideration: do you have other income from similar activities? Like, are you also getting paid for social media posts or other content creation? If so, the IRS might view all these activities together as a single self-employment business.

Does anyone know if there's a dollar amount threshold where the IRS automatically considers it self-employment vs hobby? I got a 1099 for only $650 for some product reviews, and I'm wondering if I can just put it as hobby income and be done with it.