How can I prevent a Schedule C from being generated?

[essential-power]

I have 1099-misc for Tribal Membership Distribution and the amount was listed in box 3. I have no business and I did nothing for this income other than being a Indian. IRS says all I have to do is enter the amount in line 21 of my 1040. Turbo Tax enters the amount in line 21 but then creates a Schedule C for Businesses.  How do I prevent a Sched C from being generated? No matter how I answer the questions, it always generates a Sched C.

[PaulaM · Accepted solution]

Instead of entering the 1099-MISC in the Other Common Income section, enter in the Less Common Income section. Delete the Form 1099-MISC if you have entered it elsewhere.

To report on line 21, select Wages & Income, Less Common Income, Miscellaneous Income, then Other Reportable Income. Then add the description 'Tribal Membership Distribution' and enter the amount.. The income will be listed on line 21, but you won't have self-employment taxes.

[Confused Inupiaq]

I just want to let Turbo Tax know that this is still an issue. It has been the last 4 years... I just got disconnected from a lovely representative (Hope, thank you for all your efforts) and she was the third person I've worked with today over 4 hours to resolve this. Can this please be fixed? My taxes are relatively simple, and this one error prevents me from filling...

[BillM223]

@Confused Inupiaq

Two updates:

1. The IRS has created the form 1099-NEC, which should be used to report non-employee compensation (like goes to Schedule C). In theory, this means that income reported on a 1099-MISC should not trigger a Schedule C (although it may create a Schedule E if it's rents or royalties).

2. If you do a Search (upper right) for 1099-misc and click on the jump-to link (Mac users must find 1099-misc in the Topics List). This will take you to the 1099-MISC entry interview (NOT the Schedule C).

Enter your data here, and if your income is in box 3, you are OK.

However, note that you may have to answer some of the following questions to avoid being considered a business anyway:

A. "Did the [source of 1099-MISC] involve work that's like [your name] main job?" say NO, since this is tribal distribution, not work.

B. "Did the [source of 1099-MISC] involve an intent to earn money?" - again, say NO since you are getting this for being a tribal member and not working for it (right?).

And, yes, as noted before, this will appear on line 8 on Schedule 1 (1040) as Other Income.

Now you should be able to e-file.