I am an independent consultant and received a 1099-NEC
I do my taxes every year with turbotax. I entered in my 1099-NEC. Then it asked if I had any business expenses. If I click yes, then it makes me fill out a Schedule C. When I get there I am so confused on what to fill out. What the business name is (do I use the Name of the business I'm a consultant for?) and the address (who's address do I use?). I don't keep any supplies at my house to sell.
As an independent consultant I just have people buy off the website and the company ships to them directly.
HELP me out! I'm already freaking out!
if I don't claim expenses then I don't have to fill out the schedule C (but also don't get money back...which at this point I'm okay with)
Actually, the IRS wants you to claim the expenses as well as the income.
Part of the reason for this is that your income may be eligible for the QBI (Qualified Business Income) deduction where 20% is tax free.
Since you get paid as an independent contractor, you should keep records just like any other business. If the IRS audits you, they will expect you to have them. Just keep a log and save it with your tax file.
For Schedule C you can use your name and social security number as the business name and EIN number if you don't have something else set up. Don't use the name of the company that paid you since you are not their employee. You can use your home address if that is the place you work out of.
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thank you for your response...few follow up questions (and probably more to come as I go through the form).
In the TELL US ABOUT YOUR BUSINESS...
check any that apply
* I use my name as the name of my business
* My business address is the same as my home address
* I started or acquired the business during 2020
* I have employees in my business
So I started as a consultant August 2020...would I click that?
And you say I should use my name as the name of my business?
Then my home address is my business address?
I'm just confused, because I don't consider this a BUSINESS :(
If you are a consultant, then you have been hired to work a job making your own decisions and using your own judgement for that job, not doing the job like an "employer tells you to do it" and are considered self-employed.
If you disagree, then refer to the following:
Instructions from the back of Form 1099-NEC:
Instructions for Recipient You received this form instead of Form W-2 because the payer did not consider you an employee and did not withhold income tax or social security and Medicare tax.
If you work for someone else and are paid without taxes being withheld, you are considered a self-employed person unless the activity is a "hobby" and then the deductions are limited.
For additional information, please refer to the following link:
If you believe you are an employee and cannot get the payer to correct this form, report this amount on the line for “Wages, salaries, tips, etc.” of Form 1040, 1040-SR, or 1040-NR.
You must also complete Form 8919 and attach it to your return.
For more information, see Pub. 1779, Independent Contractor or Employee.
If you are not an employee but the amount in this box is not self-employment (SE) income (for example, it is income from a sporadic activity or a hobby), report this amount on the “Other income” line (on Schedule 1 (Form 1040)).
Box 1. Shows nonemployee compensation. If the amount in this box is SE income, report it on Schedule C or F (Form 1040) if a sole proprietor, or on Form 1065 and Schedule K-1 (Form 1065) if a partnership, and the recipient/partner completes Schedule SE (Form 1040).
Please refer to the following IRS link regarding being a W-2 employee vs self-employed: