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how to properly report income without 1099-misc
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you are right that even if you do not receive a 1099-misc, you still need to report all income to the irs.  report the $40 on schedule c or schedule c-ez.  since your net profit was less than $400, you do not need to file schedule se.  from the irs web site: self-employment income it is a common misconception that if a taxpayer does not receive a form 1099-misc or if the income is under $600 per payer, the income is not taxable. there is no minimum amount that a taxpayer may exclude from gross income. all income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on form 1040. use form 1040, schedule c, profit or loss from business, or form 1040, schedule c-ez, net profit from business (sole proprietorship) to report income and expenses. taxpayers will also need to prepare form 1040 schedule se for self-employment taxes if the net profit exceeds $400 for a year. do not report this income on form 1040 line 21 as other income. independent contractors must report all income as taxable, even if it is less than $600. even if the client does not issue a form 1099-misc, the income, whatever the amount, is still reportable by the taxpayer.
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