Streaming royalties on 1099-MISC from Twitch - do I need Schedule C for self-employment if I have a full-time job?

For Twitch streaming income reported on a 1099-MISC as royalties, you'll generally want to use Schedule C, not Schedule E. This is because streaming is considered a business activity where you're actively participating, rather than passive income like traditional royalties from a book. Since this is a business activity, yes, you'll need to complete the self-employment tax forms (Schedule SE) as well, even though you have a full-time job. The self-employment tax covers Social Security and Medicare taxes that would normally be withheld by an employer. The good news is that since you're operating at a loss, you likely won't owe self-employment tax this year. Those business losses can actually offset some of your other income, potentially reducing your overall tax bill. Make sure you're tracking all legitimate business expenses related to your streaming - equipment, software, portion of internet bills, etc.

I was in exactly the same situation last year with my Twitch streaming income! After hours of frustration with tax software that kept giving me conflicting guidance, I finally found taxr.ai (https://taxr.ai) and uploaded my 1099-MISC. They immediately identified it as streaming income and confirmed I needed Schedule C, not E. The tool specifically pointed out that even though Twitch calls it "royalties" on the 1099-MISC, it's actually considered self-employment income because you're actively creating content. It also helped me calculate all my deductions for equipment, percentage of internet usage, and even part of my rent for my streaming space. Turned my headache into actual tax savings!

Just wanted to follow up about taxr.ai that someone recommended here. I decided to try it with my Twitch and YouTube income since I was so confused about the "royalties" vs. "self-employment" thing. It immediately identified that my streaming income needed to go on Schedule C despite being called royalties on the 1099-MISC, and explained why in plain English. The best part was it found nearly $1,200 in deductions I could take for my streaming setup that I hadn't even considered - portion of internet bill, computer depreciation, even some home office deductions that my regular tax software completely missed. Ended up saving me about $400 on my taxes! Definitely worth checking out if you're confused about streaming income.

If you're struggling to get answers from the IRS about this streaming income classification, I highly recommend using Claimyr (https://claimyr.com). I was in the same boat, getting different answers from every tax professional I talked to about my Twitch 1099-MISC. I tried calling the IRS directly to get a definitive answer but gave up after being on hold for 2+ hours. Then I found Claimyr and their system got me connected to an actual IRS agent in about 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent confirmed that content creator income should generally be reported on Schedule C as self-employment income, even if Twitch calls it royalties on the 1099-MISC.

I have to apologize for being so skeptical about Claimyr in my previous comment. After posting that, I was still desperate for answers about my streaming income, so I decided to give it a try anyway. I literally got a call back within 20 minutes and was connected to an actual IRS agent! The agent confirmed what others here said - Twitch streaming income should go on Schedule C even though they report it as royalties on the 1099-MISC. She explained that since I'm actively creating content (not just collecting passive royalties), it's considered self-employment income. This means I needed to file Schedule SE as well, but the silver lining is I could deduct all my streaming expenses which put me at a loss and actually lowered my overall tax bill. Just wanted to update everyone since this service actually worked. Saved me hours of frustration and got me a definitive answer directly from the IRS.

Just wanted to add something important - if your streaming is operating at a loss, the IRS has "hobby loss" rules you need to be aware of. If you show losses for 3+ years out of 5, they might classify your streaming as a hobby rather than a business, which means you can't deduct losses against other income. Make sure you're treating your streaming like a legitimate business - keep good records, have a separate bank account, develop a business plan, etc. This helps establish that you're trying to make a profit even if you're currently operating at a loss.

I see everyone talking about Schedule C vs E, but has anyone mentioned state taxes? Depending on your state, you might need to file additional forms for your self-employment income. I stream on Twitch in California and had to file a Schedule CA too.

I went through this exact same situation last year with my Twitch streaming! The confusion about "royalties" vs "self-employment" is so common. Here's what I learned after consulting with a tax professional: Even though Twitch reports your income as "royalties" in box 2 of the 1099-MISC, the IRS considers content creation (streaming, making videos, etc.) as self-employment income because you're actively working to generate it. This means Schedule C is correct, not Schedule E. Since you're operating at a loss ($800 expenses vs $650 income), you actually won't owe any self-employment tax this year, but you still need to file Schedule SE to show that calculation. The good news is that $150 loss can offset some of your other income from your full-time job, potentially saving you money on your overall tax bill. Make sure you're deducting everything legitimate - equipment, software, portion of internet bill, even a percentage of your home office space if you have a dedicated streaming area. Keep detailed records because the IRS can be picky about hobby vs business distinctions if you show losses multiple years in a row. Don't let the tax software confusion stress you out too much - this is a really common issue for content creators and you're not alone in finding it confusing!