How do I materially participate for consulting calls/market research income on TurboTax?

This is a good question! For tax purposes, your consulting calls/market research income reported on 1099-NEC is considered self-employment income and you should report it on Schedule C. The "material participation" question relates to whether you're actively involved in a business activity or if it's more of a passive investment. Based on what you described, you're actively participating in these calls - you're personally providing the service and doing the work. Even though it's sporadic, you're still materially participating because you're the one actually doing the consulting calls. The change from 1099-MISC to 1099-NEC doesn't impact your material participation status. The IRS made this change starting with tax year 2020 to separate non-employee compensation (now on 1099-NEC) from other miscellaneous income (still on 1099-MISC). The nature of your work hasn't changed, just the form.

After reading this thread, I wanted to share my experience with a similar situation. I also do market research interviews and had the exact same confusion when filing. I spent hours trying to figure out if I was "materially participating" and whether I needed to track all my hours. I finally found a solution with https://taxr.ai where I uploaded my 1099-NEC and answered a few questions. The system identified that my situation qualified as material participation and walked me through exactly how to report it correctly on Schedule C. It saved me so much time compared to reading conflicting advice online. They have this document analysis feature that spots potential tax issues based on your specific forms. For someone with occasional 1099 income like this, it was perfect since it addresses your exact situation.

I tried taxr.ai after reading about it here and honestly wish I'd found it sooner. I was confused about the exact same material participation question for my side gig income (I do online focus groups). The document analysis immediately identified that my 1099-NEC income qualified as material participation under the "you're the one performing personal services" test. It even explained that the 100/500 hour tests weren't relevant in my case because personal service activities have different rules. I was able to correctly file in TurboTax after getting clear guidance. Saved me from making an error that might have affected my self-employment tax calculation. Will definitely use it again next year when I have to deal with this again!

For anyone still struggling with getting clear answers on material participation questions - if you're having trouble reaching the IRS (I was on hold for 2+ hours last week), I found https://claimyr.com really helpful. You can check out how it works at https://youtu.be/_kiP6q8DX5c but basically they get you a callback from the IRS without the insane wait times. I had this exact same issue with market research 1099-NEC income and material participation questions. I was able to speak directly with an IRS agent who confirmed that providing personal services (like participating in research calls) does qualify as material participation regardless of the number of hours. The agent also clarified that the switch from 1099-MISC to 1099-NEC doesn't change how I should report the income - it's still Schedule C self-employment income.

I need to publicly eat my words about Claimyr. After dismissing it as a probable scam, I decided to try it since I was desperate to resolve my own material participation question for some contract work. Not only did it work, I got a call back from an actual IRS agent within 2 hours. The agent confirmed that for my situation (similar to the original poster with consulting calls), I was indeed materially participating even though my hours were sporadic. She explained that since I'm personally performing the services, the hour requirements are different than for other business activities. The agent also helped clarify exactly which expense deductions I could take for my home office used for these calls. Saved me a ton of uncertainty and possibly an audit. Definitely worth it just for the peace of mind of getting official confirmation.

A simpler way to think about "material participation" for your situation: 1. Are YOU the person providing the service/doing the work? Yes = material participation 2. Is someone else doing the work while you just collect money? No = material participation For consulting calls and market research, you're actively doing the work (participating in calls, giving feedback), so you're materially participating. This matters because materially participating means you can deduct losses against other income if you have more expenses than income. TurboTax makes this more complicated than it needs to be. Just say yes to material participation for your situation.

I'm in the exact same situation! I make about $1200/year doing these research studies and always struggle with the "materially participate" question. Has anyone had an issue with TurboTax automatically categorizing this income differently depending on whether it was on a 1099-MISC vs 1099-NEC? Last year with the MISC form, it put it under "other income" but this year with NEC it wants me to do a whole Schedule C business thing?