Reporting Income - Direct Sales

As a sales representative for a direct sales company, you have an obligation to report income earned through that business for tax purposes. At tax time, the direct sales company will send Form 1099-NEC Nonemployee Compensation (if value is above $5,000) or Form 1099-MISC Miscellaneous Compensation and would report any prizes/incentives as Box 3 income. A copy of that 1099-MISC or 1099-NEC also goes to the IRS.

To report business income on your tax return, the IRS requires you to file a Schedule C (Form 1040) Profit or Loss From Business. That schedule must list all of your income for your direct sales business (along with the information from Form 1099-MISC). See the IRS Tax Tips for Direct Sellers webpage for more details.

Even if you never receive Form 1099-MISC, you are required to report all income accurately to the IRS.

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