1099-NEC and SE tax Turbotax problem

[loukas]

I'm using Turbotax Premier. Received 1099-NEC. Entered the amount ($5625) in the 1099-MISC and "Other Common Income" section under "Wages & Income". Turbotax entered the income on line 8z of Schedule 1. Turbotax did not generate SE tax associated with the 1099-NEC (no social security or medicare taxes were withheld). Even if I try to force SE tax calculations (Other Tax Situations->Business Taxes->Self-Employment Tax), Turbotax reports "Currently you aren't required to pay self-employment tax", and even if I force it again, at the next page Turbotax reports "Our calculations show that you're not liable for self-employment tax based on what's entered in your return so far."

I received a notice from IRS, asking for the filing of Schedule SE, claiming that Social Security and Medicare Taxes are owed on the 1099-NEC amount. It makes sense to me.

But, where did I make a mistake in entering the information in Turbotax? I'd appreciate expert advice.

Thank you

[TomD8]

One of the lines under "Other Common Income" is "Income from Form 1099-NEC".  Or just type 1099-NEC into the search box and click on "Jump to 1099-NEC."

Income from a 1099-NEC is self-employment income and is reported on Schedule C of your tax return.  When this is done the program will automatically generate Schedule SE.

[loukas]

Thanks for the reply. However, I entered the income precisely where you pointed, and Turbotax did *not* enter it on Schedule C, and did *not* generate SE taxes. That is the problem, and I don't think it's a small one.

It is actually worse than that: if I try to enter the income under Business Items->Business Income and Expenses (Sch C), i.e., if I try to enter it into Schedule C directly, Turbotax "discourages" the input with the following statement:

"... but before you say "yes", if you have 1099-MISCs or 1099-NECs, it's better to enter them under 1099-MISC and Other Common Income."

And when one enters it via the 1099-MISC and Other Common Income, then no Schedule C, and no SE. It's a major bug, I'm afraid.

Thanks

[VolvoGirl]

Why did you enter a 1099NEC under the 1099MISC section?  Are you using the Online version or the Desktop program?  You seem to know it should have been on Schedule C.  You can enter your income as Cash or General income. You don't need to get a 1099MISC, 1099NEC or 1099K. Even if you did you can enter your total income as General Income. Only the total goes to schedule C. You should be entering the income from your own records.

For Online....How to enter income from Self Employment
https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

To fill out schedule C in the Desktop program Deluxe or Premier…..
Go to Federal tab
Click on Wages and Income - Continue
Pick - I'll choose what I work on
Then scroll way down to Business Items
Business Income and Expenses - Click the Start or Update button

[loukas]

I am using the Desktop version.

You asked: "Why did you enter a 1099NEC under the 1099MISC section?"

Answer: Because Turbotax says so... See below:

See also that if I were to try to enter it under as Business income, which would have generated Schedule C, and SE tax, Turbotax discourages entries from 1099-NECs. See below:

And, that's what I did: I entered the 1099-NEC under the "1099-MISC and Other Income" section.

I don't get normally get 1099-NECs. I don't have Schedule Cs. No, I didn't know about Schedule C, and SE Tax, and the rest. I learned after the IRS notice.

The problem is that I followed Turbotax's instructions on entering the 1099-NEC where Turbotax was expecting it, and Turbotax did *not* generate a Schedule C, or SE tax. And, I'm left with dealing with the consequences of it. So, unless I am missing something here, I iterate that this is a major bug.

Thank you

[TomD8 · Accepted solution]

I can't duplicate your problem on my computer.

I'm using the desktop Home & Business version of TT.  Each and every time I enter a mock 1099-NEC in the "Income from Form 1099-NEC" section under Other Common Income, the program generates a Schedule C and a Schedule SE.  

All I can suggest is deleting the entries you've made and starting the 1099-NEC section over.  Be sure to complete each page carefully and continue all the way through the section.  This is unlikely to be a program bug, because thousands of TT users enter 1099-NEC's and if there were a bug in generating Schedule C's, this forum would have been flooded with similar questions - which it was not.

[VolvoGirl]

Have you been updating the program?  Try updating.  Go up to Online-Check for updates.  And if you are on Windows try updating Windows too.

[loukas]

TomD8, your very reasonable reply helped.

I deleted and re-entered the 1099-NEC, following again the same steps as before. The reason why a Schedule C and SE schedule are not generated is because I mark the income as having derived from a "sporadic" activity. If I don't check that box, Turbotax will generate Schedule C, etc.

So, all is good: Turbotax is doing the right thing, because sporadic activity income is not subject to SE tax.

My apologies for spending your time, and I appreciate your responses.

Kind regards