Is my product review program with 1099NEC considered self employment or a hobby activity?

I recently got accepted into a product testing program with a major home decor retailer. Basically I receive free furniture and home items in exchange for posting detailed reviews on their website. They just sent me a 1099NEC form for the estimated value of all the items I received last year (around $3,800). I'm confused about how to handle this for taxes. Would this be considered self employment where I'd need to file Schedule C and pay self employment taxes? Or is this more of a hobby/sporadic activity since it's not really regular income and I'm not actively trying to make a profit from it? I probably spent about 20-30 hours total last year writing these reviews, and while the free stuff is nice, I'm not sure it qualifies as an actual business. The tax implications seem really different depending on how I classify this. Anyone dealt with something similar?

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21 comments

Gabriel Freeman

•8M

This is definitely a tax gray area, but I can help explain how the IRS typically views these situations. Since you received a 1099-NEC form, the company is treating the value of those products as non-employee compensation, suggesting they view you as an independent contractor. The key factor isn't how many hours you worked, but whether you participated with the intention of making income or profit - even if that "profit" is in the form of free products. The hobby vs. business distinction comes down to a few factors: regularity of activity, whether you depend on the income, professional manner of operations, and if you're putting in effort to make it profitable. Since you're receiving items worth thousands of dollars and have an ongoing relationship with the company, the IRS would likely view this as self-employment rather than a hobby. This means you'd report it on Schedule C, potentially deduct some related expenses, and pay self-employment tax. The bright side is you can deduct reasonable business expenses related to your review activities.

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Gabriel Freeman

•8M

For deductible expenses, they could potentially claim a portion of their internet bill as a business expense since it's directly required for posting the reviews. A reasonable percentage based on business vs. personal use would be appropriate. They might also deduct a home office if they have a dedicated space used regularly and exclusively for testing products and writing reviews. Other potential deductions could include any photography equipment used specifically for review photos, software for editing/writing, and even office supplies. Just remember all deductions need to be ordinary and necessary for this specific activity.

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Victoria Brown

•8M

I was in a similar situation with product testing and reviews that came with 1099NECs. After struggling with some confusing advice online, I found this tool called taxr.ai (https://taxr.ai) that really helped me figure out my specific situation. I uploaded my 1099-NEC and answered a few questions about my product testing activities, and it analyzed everything and explained I needed to file as self-employed since I was regularly getting products and posting reviews as part of an ongoing program. It showed me exactly which forms to file and even estimated what I'd owe. Saved me a lot of confusion!

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Victoria Brown

•8M

Yes, it does help identify potential deductions specific to your situation. After analyzing your activities, it provides a customized list of possible deductions - for review work specifically, it suggested camera equipment, lighting, portion of internet costs, and even a home office deduction since I have a dedicated space for testing and photographing products. The difference from standard tax software is it specifically addresses niche situations like product testing and influencer income, which most general tax programs don't have specific guidance for. It's designed for these gray areas where classification matters, walking you through the specific IRS rules that apply to your unique situation rather than just filling in forms.

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Camila Castillo

•8M

Had to come back and say I checked out taxr.ai after seeing this thread and it was surprisingly helpful! I've been doing product testing for three different companies and wasn't sure if I should combine everything on one Schedule C or separate them. The tool analyzed my different 1099s and explained exactly how to handle them as related activities under one business. Saved me a lot of guesswork and probably a few hundred dollars in deductions I would have missed. Definitely worth trying if you're in these product review programs!

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Brianna Muhammad

•8M

I tried for weeks to get someone at the IRS to answer questions about my product review income and 1099-NECs but could never get through on their phone lines. Ended up using a service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 20 minutes when I'd been trying for days on my own. They have a video showing how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that product reviews with 1099-NEC forms should generally be reported as self-employment on Schedule C, and that I could deduct expenses directly related to creating the reviews. Having an official answer directly from the IRS was worth it for the peace of mind alone.

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Brianna Muhammad

•8M

It uses some kind of automated system that navigates the IRS phone tree and waits on hold for you. When an actual IRS agent picks up, it calls your phone and connects you directly to them. You don't have to sit through the endless holds and disconnects. They don't pretend to be the IRS or answer questions - they literally just get you to the front of the phone queue and then connect you with the actual IRS agent. I was skeptical too but was desperate after trying to get through for weeks. The agent I spoke with was definitely IRS (verified my identity and everything) and gave me the official guidance I needed about my specific 1099-NEC situation.

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Eloise Kendrick

•8M

Ok so I need to eat my words. After my skeptical comment I decided to try Claimyr myself since I've been trying to reach the IRS about my own product review income situation. It actually works exactly as described - I got connected to a real IRS agent in about 25 minutes when I'd been trying unsuccessfully for over two weeks. The agent confirmed that my product testing activities (similar to OP's situation) should be treated as self-employment since they issued a 1099-NEC, and I needed to file Schedule C. She also clarified which expenses were legitimately deductible for my situation. Definitely worth it to get an official answer directly from the source.

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Lucas Schmidt

•8M

Something important no one has mentioned - if you file as self-employed, you'll owe self-employment tax (about 15.3%) on top of regular income tax. That can be a nasty surprise if you're not expecting it. For $3,800 in product value, that's around $580 just in SE tax. But here's a tip: you can deduct the value of any products you donated or gave away after reviewing them! I do product reviews too and always donate items I don't need, then get a donation receipt which offsets some of the tax impact.

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Lucas Schmidt

•8M

Yes, you can still donate items after using them - the donation value would be the fair market value at the time of donation (which would be less than new due to being used). Just make sure you get a receipt from the donation center. For donations over $250, you need a written acknowledgment from the charity that includes a description of items donated, date, and whether you received any goods or services in return. For items worth over $500 total, you'll need to fill out Form 8283. I recommend taking photos of donated items and keeping a detailed list with estimated values for your records in case of audit.

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Isabella Russo

•6M

Just to add some clarity from someone who's been through this exact situation - the IRS has specific tests they use to determine business vs. hobby activity. The main factors are: do you carry on the activity in a businesslike manner, do you depend on income from it, and do you expect to make a profit (which in your case would be the value of free products received). Since you're getting $3,800 worth of products through an ongoing program with regular review requirements, this almost certainly qualifies as self-employment income. The fact that they issued a 1099-NEC basically confirms they're treating you as an independent contractor. One thing to keep in mind - you'll want to track any expenses related to your review activities starting now if you haven't already. Things like the time you spend photographing products, any props or backgrounds you buy for photos, storage costs if you keep products for testing periods, etc. These can help offset some of that self-employment tax burden. Also consider setting aside about 25-30% of the product values for taxes going forward, since you'll owe both income tax and self-employment tax on the fair market value of everything you receive.

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Nia Davis

•10d

For tax purposes, you should use the amount reported on the 1099-NEC form that the company sent you. The IRS expects you to report the same amount that's on the 1099, since that's what the company already told them they paid you in non-employee compensation. Even if you think some items were overvalued, trying to use different amounts could trigger a mismatch notice from the IRS. If you genuinely believe the values were significantly inflated, you'd need solid documentation (like comparable retail prices) and might want to consult a tax professional about how to handle the discrepancy properly. The safer approach is to report what's on the 1099-NEC and focus on maximizing your legitimate business deductions to offset the tax impact. That way you avoid any potential issues with the IRS computer matching system.

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