You'll need to sign in or create an account to connect with an expert.
No, you do not want sch C and self-employment tax. You want to enter the 1099-NEC:
under Other Common Income.
Select Add 1099-NEC and enter the information. If you upload, double check the entries.
Describe the reason, Retention Bonus, continue
Select This is not money earned as as employee. It is from a sporadic activity.
This properly puts the money on line 8z of schedule 1.
I was told by an expert last year when I had a similar situation that putting this income as āother incomeā would automatically trigger an inquiry because anytime a 1099-NEC was submitted they would look for a Schedule C. Can anyone confirm or deny the legitimacy of this claim? I do not want to deal with the headache of an inquiry.
@AmyC
While there are no guarantees for what the IRS may or may not do, the answer provided by Expert AmyC is correct. Form 1099-NEC is relatively new and used to report many types of income. Receiving this form does not always mean you are self-employed. That's why you'll see several options under Other Common Income in TurboTax. As you enter the 1099-NEC, just be sure your answers are accurate and complete.
I guess why I am still confused is because according to this IRS document ( https://tax.iowa.gov/sites/default/files/2023-01/2022%20Expanded%20Instructions_011223.pdf ) an NEC is used for āservices in the course of trade or businessā and should not be used for āother income not subject to self-employment taxā. (See below for the passages to which I am referring) This would make it seem that this income should not have been reported on Box 1 of a 1099-NEC, but instead Box 3 of a 1099-MISC. The payer has been no help to me with any of my concerns and it would seem there is no chance of them reporting it differently.
Passages from document:
What is NEC? If the following four conditions are met, you must generally report a payment as NEC.
⢠You made the payment to someone who is not your employee.
⢠You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations).
⢠You made the payment to an individual, partnership, estate, or, in some cases, a corporation.
Payments not reported in box
1. Do not report in box 1:
⢠Expense reimbursements paid to volunteers of nonprofit organizations;
⢠Deceased employee wages paid in the year after death (report in box 3 of Form 1099-MISC) (see Deceased employee's wages, earlier);
⢠Payments more appropriately described as rent (report in box 1 of Form 1099-MISC), royalties (report in box 2 of Form 1099-MISC), other income not subject to self-employment tax (report in box 3 of Form 1099-MISC), and interest (use Form 1099-INT)
Similar situation to above - Received a retention bonus as a preschool teacher from a state govt agency. Received a 1099-MISC. Turbo tax continues to force this into a schedule c. How do I just account for this as misc income and not a small business. Turbo tax 2022 kept it as misc income on schedule 1 - And did not force a business based filing.
If you received a 1099-MISC, you would enter it this way.
Take the following steps:āÆ
If you entered this any other way, make sure to delete the other entries.
[edited 4.1.24 | 5:41am]
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
NancyWolfe
Level 2
Pluto33
Level 1
mijohn
Level 2
katiecm07
New Member
in Education
wkkunkle
Level 1