Last year I made about $1200 as a guinea pig for a hospital's medical experiments. I'd get a vaccine or drug and then give them blood samples they could test.
My U.S. tax software classified this as "self-employment" in a one-person small business, which seems like a lofty description, but it didn't for the year before when I made half as much. Is the software correct?
curtisports2
It's not the software - never rely on software. It's the law, or the interpretation of it, which, with tax law, is full of gray areas.
A very occasional instance would not be considered self-employment. Recurring activity of the same nature generally is. Contrary to what many believe, all income reported on a 1099-MISC is not automatically considered self-employment, it can be reported as 'other income' on (for 2017) Line 21 of 1040. You may be contacted by the IRS for additional information and the decision is theirs, in the end.
I found one accounting site that says this:
'A man participated in a clinical drug study for which he was paid a lump sum. His intent was to receive treatment for asthma (Private Letter Ruling 9106004).'
This tells me that the claim was questioned by the IRS and the IRS made a ruling. It doesn't say what the ruling was, but I assume it was that this income was not self-employment income.
In your case, not only is this recurring - you've done it in consecutive years - you freely admit that you do it to earn income. I feel confident in saying that the IRS will not decide in your favor. Some people buy and sell things to earn money. You participate in medical studies to earn money. File a Schedule C-EZ. You may offset income with any legitimate expenses of producing that income. I can only see mileage but there might be something else. Since your net income on $1,200 gross will almost certainly be over $400, you will also have to file a Sch SE-EZ and pay the self-employment tax. You might be able to get away with not having to amend the previous year's return, but if you earn income this way for future years, you might want to do that and pay the SE tax you owe for the first year, or you run the risk of the IRS catching up with it at a later date, and the penalties then could be more than the tax.
The Oracle of Omigod
If you get a 1099 form from the hospital then you could be considered as an independent contractor.
Elaine M
If you are not being paid by someone (you get a 1099 or a W-2), or are not claiming your home business as your sole income, you're not self employed.
In my state rummage sales and eBay sales are not self employment.
Slickterp
The software is correct, that is self employment income. Would have been the same last year as well, you did something wrong. Put it this way - it's taxable income that you self employment and income taxes on, and it was last year too if you made over $400.
babyboomer1001
Did they give you a W-2 or a 1099 or are you under contract? From what you have stated, I couldn't tell you. It is not about how much you make or what you do.