Is my App Store income considered 'Self-Employed' or 'Hobby income' for taxes?

Based on what you've described, this sounds more like self-employment income than hobby income. The key factor is your intention to make a profit, which you demonstrated when you converted the app from free to paid specifically to generate income. While it might seem simpler to file as hobby income, the IRS has specific criteria for hobbies vs. businesses, and your situation leans toward business activity. With self-employment reporting, you can deduct legitimate expenses like your developer fee and potentially a portion of costs related to developing/maintaining the app. The fact that you're not depending on this income or actively trying to grow it doesn't automatically make it a hobby. Many people have small side businesses that they don't actively grow. What matters is the profit motive and whether the activity is carried out in a businesslike manner. If you report as self-employment, you'll file Schedule C, which isn't as complicated as it might seem for a small operation like yours. And if you continue this activity over multiple years, reporting it consistently as self-employment will look more appropriate to the IRS than switching classifications.

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I've been a mobile app developer for 8 years and dealt with this exact situation. In your case, I'd 100% file as self-employed on Schedule C. Here's why: 1. You made the app paid specifically to generate income = profit motive 2. Apple developer fees and commissions are legitimate business expenses you can deduct 3. The "hobby vs business" test includes factors like maintaining proper records and operating in a businesslike manner Even with minimal profit, the IRS recognizes legitimate small businesses. The classification doesn't depend on how much time you spend or whether it's your main income source. One tip: keep good documentation of all expenses and development time. If you ever get questioned, showing that you treated this as a business activity from the beginning will help support your classification.

Does nobody here realize that if ur income is under $400 from self-employment you dont even have to pay self employment tax?? So all this worry about filing schedule C might be pointless. Also hobby income goes on Schedule 1 line 8 now (used to be "other income" on old forms). But cant deduct expenses so that sucks. Honestly for such a small amount IRS probably wont care either way lol but self employed makes more sense and lets u deduct expenses

Based on my experience with similar situations, I'd strongly recommend filing as self-employment income on Schedule C. The key indicator here is that you deliberately switched from a free app to a paid app with the intention of generating revenue - that's a clear profit motive, which is the primary factor the IRS considers. A few important points to consider: 1. **Expense deductions**: With self-employment classification, you can deduct your $99 developer fee and other legitimate business expenses, which could potentially reduce your taxable income below the $175 you received. 2. **Documentation**: Keep records of all expenses related to the app (developer fees, any equipment costs, software subscriptions, etc.) to support your business classification. 3. **Consistency**: If you plan to continue this activity in future years, it's better to establish the self-employment classification now rather than switching between hobby and business classifications later. The amount of time you spend on the app or whether it's your primary income source doesn't disqualify it from being a business. Many legitimate small businesses operate exactly as you've described - maintaining an existing product with occasional adjustments. Given the modest income level, the additional complexity of Schedule C is minimal and the ability to deduct expenses likely makes it worthwhile.