Amend Return to add 1099-NEC. How to add 1099 NEC with same company that is my employer

[00011074]

My husband and I filed married jointly: 1040 for my husband's W2 job and a Schedule C for my small business. My husband started a new job on 11/04/2024. His employer is a new business, and my husband is one of their first employees. So when he started there, he was hired as a salaried employee with a fixed income that he was to be paid bi-weekly, but then they had him fill out a W9 because they didn't have payroll set up yet. He was paid for two weeks of work as an independent contractor, I guess.  He then became a W2 employee in the third week and has been an employee since then. At the end of 2024, he got a W2. We used that information to file our taxes on 1/31/2024 and got a refund a couple of weeks later. We didn't realize he would get a 1099-NEC until it came in the mail the second week of February after the taxes were submitted and accepted.  I'm trying to add the 1099-NEC to amend the return. Im not sure how to answer the following questions:

It asks if the 1099-NEC is my husband's business, work on the side, main source of income, etc. Its not his business because he was hired and signed an employment offer for a set salary that he gets every two weeks. It wasnt something he did on the side because he still works there but now as an employee.

 It asked when he started which was 11/04/2024, and then asks when he stopped. He doesnt know how to answer that because he didn't stop working there, he just became a W2 employee a couple weeks later.

It also asks why he is amending the return. I dont know if he should just say because he got the 1099-NEC late after we submitted the tax return, or if I he should say he was a W9 worker first then became a W2 a couple weeks later, but his employer sent the 1099-NEC late.

If anyone could give us some guidance that would be greatly appreciated.

Thank you

[KrisD15 · Accepted solution]

A W-9 is not a type of worker, it's a form employers and businesses ask for to verify that you have a legal right to work and provides your tax Identification number.

The problem you are having is that the company sent you a 1099-NEC which is Non-Employee Compensation and that is the same as Self-Employed income.

You might need to "pretend" your husband had a business that lasted the two weeks in order to repot that income. 

As a W-2 employee, the employer withholds and pays the FICA tax (social security)

For the income reported on the 1099-NEC, no FICA was paid, so (as you know since you file a schedule C for your small business) that tax is paid through your 1040. 

The reason for amending would be something like "Received unexpected 1099-NEC"

[00011074]

Thanks for your response. I have one more question. When Turbotax asks "what type of income is the 1099 NEC", one of the options is "income that should have been reported on W2." I feel like that is more accurate, based on his situation since he was hired as an employee. However, I do understand that he still may have to choose an independent contractor. I'm just trying to make sure we know what all of our options are. Do you think it might be worthwhile or even possible to choose "income that should have been reported on W2" and or ask for a corrected W2 since he was hired as an employee and signed an offer letter stating he was an employee? 

[DawnC]

So, for his first few weeks of work, he nor the employer paid any payroll tax.   And for the remainder of the year, he was properly set up on payroll, meaning the employer paid half of the payroll taxes and he paid the other half and this was correctly reported on his W-2.

How you enter the form will determine who pays the payroll tax for those first few weeks of income.   All of his income should have been on the W-2, but because of whatever (timing) reasons, it wasn't.   So technically, you should be checking the box that says  This income should have been reported on a W-2.    

 If you enter the 1099-nec in TurboTax:

• Checking that box will generate a Form 8919 and only his share (half) of the payroll taxes are added to his return.   The IRS will go back to the employer for their half of the payroll tax and possible penalties.   Since he is still employed with that company, requesting a corrected W-2 and voided 1099-nec, should be done before filing Form 8919.
• Not checking the box will generate Schedule C in which he would pay all of the payroll taxes, but would be able to deduct business related expenses.