I need some clarification on entering information on a 1099-NEC

[poncho_mike]

I'm helping my son with his taxes, and I ran into an issue.  He is young and lives in an apartment, so his taxes are generally pretty simple.  An acquaintance of his asked him to help out at his business for a few hours one day.  His friend's business is building custom computers for gaming.  He paid my son $100.  The income was reported on a 1099-NEC.  My son had no involvement in this business other than the 1/2 day he spent helping the guy catch up.    I'm a little unsure of how to fill out the Form C.

In the "Name of Proprietor", TT currently has my son's name and next to it, my son's social security number.  Is this correct, or should it be the guy who paid him and that person's SS#?  Or would it be the business name and business TIN?  Is this block intended for the person who received income, or the person who paid him?

For "A", I put "building computers".  For "B", I entered code 334110.  I got this from the IRS website.

For "C", I put the Business Name

For "D", do I put the Payer's TIN?

For "F", Accounting method.  I put Cash, since I assume this is asking how my son was paid.

[CesarJ]

Yes, your son's name and Social Security number is in the right place. Schedule C should only have information from your son and not the payer.

• Box C is only applicable if, for example your son has started a business and is registered with his state.
• Box D is only used if your son has an Employer Identification Number for a formal business.
• Box F is correct for the accounting method selected. 

In your son's case you have answered all the questions correctly.

[poncho_mike]

@CesarJ  Thanks for the quick feedback.

Does the payer's business name or TIN get entered anywhere on Schedule C?

I deleted the Business Name and address per your comments.  When I go through error check, it shows errors because the business name and address are not filled in.

Do I even need to fill in section A and B, since this was a one time thing and not a business venture for my son?

I also assumed this is not a qualified trade or business under section 199A.  Here is a screen shot of the Schedule C.  Do I need to check any of the boxes other than what I've done?  I'm a little confused by the second box "If this business was operated by the taxpayer, check this box".  In my opinion, the business that paid him was operated by another individual.  Turbotax won't let me remove the check mark for this box.  Or am I looking at this wrong, TT considers my son's effort a business separate from the one who paid him?

[MelindaS1]

No, you do not want to enter the business information from the person who issued you the 1099-NEC anywhere on Schedule C. 

To clear the errors, you'll want to have your son's name and his home address listed; yes, this is an IRS requirement and will not be eligible for e-filing if left blank. 

I highly recommend switching to Step-by-Step mode by selecting the button in the upper-right corner, and answering all the interview questions to complete this entry. Entering everything directly onto the forms can lead to miscalculations and errors, and is not recommended. 

IRS - 2025 Schedule C instructions

[poncho_mike]

@MelindaS1 MelindaS1 @CesarJ 

Thanks for the feedback.  I looked up the IRS instructions for 1099-NEC before I started this thread, and it confused me because it referred to a business my son started.  Here is a copy/paste from the IRS website.

"Use Schedule C (Form 1040) to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity, a not-for-profit activity, or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the Instructions for Schedule 1 (Form 1040), line 8j."

So I have two questions:  1) Since the business owner issued a 1099-NEC with a TIN, how does the IRS know the Schedule C applies to the 1099-NEC my son was issued if the business owner is not listed anywhere on the form.   2) Since he only worked once for a few hours, should we be reporting this on Schedule 1 (Form 1040), line 8j?

[LeticiaF1]

Form 1099-NEC is used to report Nonemployee Compensation, this income is considered self-employment.  If your son is doing this work with the intend to make a profit then report this as self-employment income on Schedule C.  This way he can claim any expenses that were related to this income.  The Schedule C, will show your son's name not the name of the company that paid him will not show up on the Schedule C, but it will be reported when you enter the 1099-NEC.  

If he does this work with no intention of making a profit. In this case he would not have to pay self employment income but he could not claim any expenses. 

To report 1099-NEC hobby income in TurboTax:

1. Enter it under Wages & Income
2. Go to Less Common Income
3. Under Miscellaneous Income go to Hobby income and Expenses
4. Select that the income is from a "sporadic activity or hobby" to avoid self-employment tax
5. This would report this on Schedule 1, Line 8, rather than Schedule C. 

Business v. Hobby

@poncho_mike