Does receiving a 1099-NEC automatically trigger a Schedule C?

Forum|Forum|4 years ago
February 4, 2022
3 replies
38 views

I received a 1099-NEC for a stipend for "volunteer" board service in (2021). It's from the same company and in the amount as in tax year 2020. In reviewing my 2020 TurboTax return there is not a Schedule C, but the income is included on a Schedule 1. This year, in 2021, TurboTax is generating a Schedule C. What's different? Or what did I do wrong/differently? And will I now have to pay for a different version of TurboTax (self-employed)?

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ThomasM125

Level 15

The stipend would most likely be considered self-employment income by the IRS since it is an ongoing thing. If it was just a one time job not related to your normal occupation, it may be considered "Other" income as opposed to self-employment income. The difference in taxation is that self-employment income allows you to deduct expenses whereas Other Income does not allow you to do such. Also, self-employment income is subject to self-employment (social security) tax, at a rate of about 15% of your net self-employment income.

You will need to use the self employment version of TurboTax to account for your self-employment income.

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cep3959Author

Level 2

This is helpful. I wonder if I selected "hobby or sporadic" income last tax year (2020) since it was an unexpected payment for a couple of Zoom meetings. Perhaps, TurboTax picked it up as reoccurring for 2021 and pushed me into a Schedule C. Does it make a difference anywhere if I was asked to serve on this advisory board as part of my regular job activities and not a side-gig for the purpose of earning money?

DaveF1006

Level 15

It's possible that Turbo Tax has determined that this is a regular activity that happens yearly. Since this is compensation for your role on the advisory board, you are still responsible for paying your share of Social Security and Medicare taxes thus this should be reported as Business Income even though it technically isn't a business.

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