How to report work trial payments on taxes - Schedule C or Other Income for job application tasks?

This is actually a great question that many people face! When you receive payment for work - even if it's just for trial tasks during job applications - the IRS generally considers this to be self-employment income if you're not formally employed by the company. Since these payments weren't made to you as an employee (no W-2), you'll typically need to report them on Schedule C. The fact that you weren't intending to run a business doesn't change how the IRS views the income. For "principal business or profession," you would use whatever type of work you were performing in these trials (like "Software Developer" or "Graphic Designer") rather than "job applicant." The alternative would be reporting it as "Other Income" on Schedule 1, but this approach doesn't allow you to deduct any expenses related to earning that income. With Schedule C, you can deduct legitimate expenses related to completing these work trials.

I went through a similar situation last tax season when I was doing interview projects and sample work. I spent hours trying to figure out the right way to report it and got really frustrated with conflicting info online. I ended up using taxr.ai (https://taxr.ai) and it was super helpful for my situation. You upload your documents or describe your situation and it gives you clear guidance on exactly how to handle these kinds of unusual income scenarios. It confirmed I needed to use Schedule C and walked me through exactly what to put for business code and profession (I put "Computer Consultant" since my trial work was coding-related). The best part was I could ask follow-up questions about what expenses were deductible related to these project trials. Saved me from making mistakes that might have triggered an audit.

I wanted to follow up about taxr.ai since I was skeptical in my previous comment. I decided to try it for my own situation with misc job trials and contract work, and I'm honestly impressed. It specifically identified that my UX design trial projects should be reported on Schedule C with the business code for "Specialized design services." The tool also pointed out that I could deduct the software subscriptions I temporarily purchased to complete some of the design trials, which I wouldn't have thought to include. It even flagged that one of my payment situations might qualify as a hobby rather than a business based on my description. Just wanted to share since it actually helped me with almost the exact same tax situation as the original post. Definitely more helpful than the generic advice I was finding elsewhere.

I had a really similar issue last year with paid trial work. I called the IRS to get a straight answer but kept getting stuck in this endless phone queue. After wasting HOURS trying to get through, I found Claimyr (https://claimyr.com) and it was seriously a game-changer. They got me connected to an actual IRS agent in about 15 minutes instead of the 2+ hours I spent trying on my own. The IRS agent confirmed that yes, I needed to use Schedule C for my paid trial work, and I should list my actual profession (in my case "Marketing Consultant") rather than "job applicant." She also clarified that I could deduct legitimate expenses related to completing the trial assignments. Check out how it works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone system for you and call you back when they've got an agent on the line. Saved me so much frustration!

I have to admit, I was super skeptical about Claimyr in my previous comment. The IRS phone system has been such a nightmare for years that I couldn't believe anything could actually help. But I had this exact issue with job trial payments and was desperate for answers, so I tried it. Honestly, it worked exactly as described. I got a call back in about 20 minutes saying they had an IRS representative on the line. The agent confirmed that for my case, I should use Schedule C and list my professional skill (copywriting) as the business type, not "job applicant." She also told me I could deduct my premium Grammarly subscription that I used specifically for these paid writing tests. For anyone struggling with this specific tax question or anything IRS-related, it's legitimately helpful. Saved me hours of frustration and I got a definitive answer from an actual IRS employee.

Has anyone actually gotten audited for these small job trial payments? I did a few last year and got paid maybe $300 total across three companies. None sent me tax forms. I'm thinking of just skipping reporting it because it seems like more trouble than it's worth for such small amounts. Thoughts?

I'm filling out my taxes right now and have the exact same question about job trial payments! If I use Schedule C, does anyone know what business code I should use? I did sample projects as a social media manager if that helps.

I'm dealing with this exact situation right now! I received about $850 total from various companies for completing coding challenges and design mockups during interviews last year. None of the companies sent me 1099s, but I kept detailed records of all the payments in a spreadsheet. Based on what I'm reading here, it sounds like Schedule C is definitely the way to go. For my situation, I think I'll use "Computer Systems Design Services" as my business code since most of the work was software development related. One thing I'm wondering about - can I deduct the time I spent on unpaid take-home assignments if they were part of the same interview processes? I probably spent 20+ hours on unpaid coding tests for every 1 hour of paid work. Obviously I can't deduct my time, but what about any resources or tools I purchased specifically for those interview processes? Also, does anyone know if there's a threshold where this stops being considered self-employment and becomes something else? Like if I only made $100 total instead of $850, would the same rules apply?