I’ve been earning some side money by doing online interviews, surveys, and product testing—mostly IT-related tasks. I’m not an employee of these platforms, but I sign up, verify my identity, and link my PayPal to get paid. Think of sites like Prolific or UserTesting.
This is my first year doing this, and I made about $3k. With tax season approaching, I’m confused about how to report this income. To me, it feels like hobby income since I don’t have set hours, commitments, or obligations. I pick tasks when I have free time, whether it’s for 5 minutes or a few hours. It’s a casual thing to earn extra cash when I’m bored.
But I’ve seen people say it’s self-employment, similar to running a small business or being a gig worker like an Uber driver. The distinction between hobby and self-employment seems unclear. For example, if someone gets paid occasionally for taking surveys or doing focus groups, does that make them self-employed? I don’t want to pay the extra self-employment tax if I don’t have to.
What does the IRS really expect in cases like this? Should I treat it as hobby income or self-employment? I just want to report it correctly.
If you wouldn’t do this without being paid, it’s probably self-employment. Are you doing any unpaid tasks, or is the payment what motivates you to participate?
Paris said:
If you wouldn’t do this without being paid, it’s probably self-employment. Are you doing any unpaid tasks, or is the payment what motivates you to participate?
Everything I do is paid. So is the deciding factor my intent? If I enjoy doing it, it’s a hobby, but if I only do it for money, it’s self-employment? It feels strange that something so subjective would be the basis for tax rules.
@Rudy
It’s more about whether you’re doing it for fun and happen to get paid. For example, someone who builds birdhouses as gifts but sells a few on the side might call it a hobby. But someone waiting tables, no matter how much they enjoy it, can’t claim it’s a hobby.
Paris said:
If you wouldn’t do this without being paid, it’s probably self-employment. Are you doing any unpaid tasks, or is the payment what motivates you to participate?
The key question is whether your activity is regular and ongoing. Profit motive matters, but even hobbies can have a profit motive. The difference is in how consistently and seriously you pursue the work.
It’s not about whether you enjoy the work—it’s about whether it qualifies as a business. If you’re earning money regularly, it’s likely self-employment and should go on Schedule C, even if it’s part-time or feels casual.
@Frankie
So if I spend $5,000 on a computer this year and only earn $3,000, it’s not a business because it’s not profitable? But if I keep the computer for a few years and eventually make more money than I spent, it becomes a business? This whole distinction feels arbitrary. How does the IRS determine if something is a hobby or a business?
@Rudy
Profitability isn’t the sole deciding factor. Even unprofitable ventures can be businesses. If you’re earning money consistently and treating it as a source of income, it’s a business. A $5,000 computer for surveys probably wouldn’t be a legitimate business expense anyway.
@Frankie
The real question is whether you’re operating on a regular and continuous basis. Occasional tasks might not qualify as a business, but frequent activity likely does.
The frequency of your work matters. Doing a task once isn’t self-employment, but doing it regularly could be. There’s no exact cutoff, but consistent activity might lean toward self-employment.
Lin said:
The frequency of your work matters. Doing a task once isn’t self-employment, but doing it regularly could be. There’s no exact cutoff, but consistent activity might lean toward self-employment.
That’s where I’m stuck. It feels vague and open to interpretation. I want to do this the right way, but it’s hard when the rules aren’t clear. If I call it a business, I could write off some expenses, but I’d also owe more in taxes. It’s frustrating.
@Rudy
If the space where you do this is also used for other purposes, it likely doesn’t qualify as a home office deduction. The rules for deductions are pretty strict.
@Rudy
It boils down to how often you’re doing this. If it’s a few hours a week, it might be self-employment. Sporadic tasks are less likely to count as a business.
The IRS guidelines admit there’s a lot of gray area here. Based on what you described, it sounds more like a hobby than a business. You’re not relying on it for your livelihood or actively trying to grow it.
@Flann
That’s how I initially saw it too, but I started second-guessing after reading about how others treat it. It feels more like a hobby that happens to pay, but I’m not sure how the IRS sees it.
Rudy said: @Flann
That’s how I initially saw it too, but I started second-guessing after reading about how others treat it. It feels more like a hobby that happens to pay, but I’m not sure how the IRS sees it.
Keeping bad records doesn’t make something a hobby. A lot of business owners don’t keep proper books, but it’s still a business.
Rudy said: @Flann
That’s how I initially saw it too, but I started second-guessing after reading about how others treat it. It feels more like a hobby that happens to pay, but I’m not sure how the IRS sees it.
Even casual, irregular income counts as earned income. If you’re getting paid for tasks, it’s not hobby income.
@Paris
So if I occasionally help people with tasks for cash, I have to report it as self-employment? That feels like a stretch, but if that’s the rule, I’ll follow it. It just seems odd to classify something casual as running a business.