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Background: My wife and I are involved in community theater and have begun producing shows. We are treating the endeavor as hobby income for the purposes of tax reporting because our intent really isn't for this to be a business for-profit and we generally charge just enough for tickets to try and cover our expenses. The actors and crew are all volunteers who do it either for some experience or just the love of performing art. Every now and then we make a small profit on a show, but generally we just about break even or lose a little bit so I think we can safely fall under the hobby rules of the IRS.

So, we just did a show that got a lot of critical acclaim and one of the bigger theaters in the area brought our troupe in and paid us a generous $2,000 for a performance which put us well into the black. Again, this isn't a for-profit endeavor so we decided to split the proceeds after expenses among all the actors and crew (varied between $100-$246 per person) as a one time deal and a thank you for their efforts and help defray their expenses of driving about 2 hours to the venue and staying in a hotel overnight.

So my question is this, does this trigger the need for me to get all of their SSN's and file a 1099 for these payments? Are there any other tax rules I should be considering in this one-off situation?

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You are expected to file 1099 for each person you pay $600 a year. I.e.: not a one time payment, but the total over the course of the year. Since we don't know how much and what else you paid - we cannot answer this question.

The real question you're asking is that if you're treating the enterprise as a hobby, whether you're supposed to file 1099s at all.

The answer to that question is yes.

You should talk to your tax adviser (a EA/CPA licensed in your state) about this, and whether it is the right thing for you to do treating this as a hobby at all.

  • Thanks. I know that there is an exception for the need to send out 1099s for personal expenses. I am just trying to figure out the line between personal and business when it comes to a hobby that generates income (but rarely profit). – JohnFx Nov 20 '13 at 16:37
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    @JohnFx hobby is generally a business. – littleadv Nov 21 '13 at 2:38

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