1099-MISC or 1099-NEC?

[npierson7]

You can report it as Other Income. Follow these steps to enter it in TurboTax:

Federal Taxes -> Wages & Income -> I'll choose what I work on -> Scroll to the bottom and under Less Common Income select Start (or Update) for Miscellaneous Income. You can enter your 1099-MISC information there. 

[icf1vvn]

Hello Lena and ...,

Hope you can help me with my question below,

1) Do I (self-employed) need to file same 1099-NEC for both business and personal sessions in Turbo Tax Home & Business version?

Viet Nguyen

[1597980]

I received a 1099-NEC Box 1 income from my recruiter.  After entering the amount, I was then asked if one of the uncommon situations applies.  It seems to me I should check the box "it is from a sporadic activity" since I did not perform a service or have a business or farm.  The recruiter is located in NY and I need to file a non-resident return for NY (my employer is based in NY).  NY asks me for the "NY source portion" of this income.  Is it  the full amount (100%) because the recruiting agency is based in NY?  Also, while this is correctly identified as a 1099-NEC Box 1 income on my NY non-resident return, somehow it comes up as a "1099-MISC Box 7" income on my NJ resident return on line 26, which asks for enclosure of document.  I reviewed the instructions for NJ return, I don't think any of the income types fit my situation (unless I consider it as a "prize/award").  

[ToddL99]

What was the payment for?

[1597980]

It was to get me to accept the job they placed me. I was losing a big bonus by switching jobs at year end so they offered to pay me $$ to make up some of my loss on bonus. No description on the 1099.

[ToddL99]

This payment was a "signing bonus", an incentive for you to accept the position - it was properly reported on Form 1099-NEC and is subject to self-employment tax and income tax. The full amount is "NY source income", since the recruiting agency and the employer are both located in NY.

The bonus was not from sporadic activity - it is directly related to your main job (you wouldn't have gotten it otherwise).

From The Tax Effects of Paying Bonuses to Employees: Employee bonuses are always taxable to employees as an employee benefit, no matter how or when they are paid. For example, a bonus paid to an employee at the time of hire (sometimes called a "signing bonus") is subject to all employment taxes. The employees must pay federal and state income taxes and FICA taxes (Social Security and Medicare) on bonus pay. 

Even though the payment did not come from your new employer, it is reasonable to conclude the recruiter was acting on behalf of the employer, ie. as as an agent of the employer. 

Don't worry about how it transferred to your NJ return - it will be treated the same way for NJ state tax purposes as if it had transferred as a 1099-NEC.

[1597980]

Thanks very much for the detailed explanation. It makes a lot of sense. It definitely was an incentive for me to accept the position, but I don't think it was from my new employer though. Also Box 7 "state income" is left blank. Does this mean I shall still treat it as 100% NY source income or is it just a federal income?

Now it looks like I need to create a Schedule C "new business" to report this payment as a "business income" (since none of the other scenarios applies and it's considered self employment income)? 

[1597980]

Hi, I received a signing bonus from my recruiter in 2020, which was reported on 1099-NEC (no tax withheld).  The amount is in box 1 and all other boxes including "state income" box are blank.  None of the scenarios described on the program for this payment seems to apply (not from a farm or sporadic activity or should have been included on W-2).  Does this mean I need to create a Schedule C "business" and  file Schedule SE even though I don't have a new business?  Also, would I report this as 100% NY source income because the recruiter and my new employer are in NY (even though state income box is blank)?

[LenaH]

Yes. If bonuses are reported on a 1099-NEC, then you will still need to pay the uncollected Social Security and Medicare tax, as well as the income tax. This could be why it is populating under your Schedule C and adding self-employment tax (which will end up being your portion of the Social Security and Medicare on this income). 

The IRS classifies bonuses as supplemental wages, along with severance pay, taxable fringe benefits, vacation pay, back pay, and overtime. Supplemental pay is anything other than your regular pay.

Typically, bonuses are added to a W-2. However, there are different withholding methods for supplemental wages that the employer can consider, which are discussed in IRS Publication 15.

Per the IRS, regardless of the method employers use to withhold income tax on supplemental wages, supplemental wages are subject to Social Security and Medicare taxes. 

Lastly, this is considered New York State income, as explained perfectly above by ToddL99. It does not matter that the state box is blank on your 1099-NEC. 

@1597980

[1597980]

I'm still struggling with reporting the signing bonus properly.  When I reported it as a NY source income, the amount shows up twice on my NY non-resident return (doubling my income for this item), first on line 6 as "business income" and then on line 16 as "other income" (even though I don't have a Federal amount on line 16).  After reviewing the NY return instructions, I believe it should not be on line 6 (which is for a business that  I "carried on" in NY where I "maintain an office, desk space, etc. with a fair measure of permanency...").  Line 16 is for "amount received as a nonresident that was derived from or connected with NY state sources". So I think line 16 is the proper place to report this item but how do I show it as "other income" on Federal return as well? Otherwise, is it ok that my Federal amount on line 16 is blank while my NY amount on line 16 shows the bonus amount?

Also, based on the TurboTax guidance,  I answered "NO" to the question if I "played an active role in the business".  Since this is really a "one off" income, shouldn't it be "other income" for Federal purposes as well? But the Federal return directs me to create Schedule C for 1099-NEC income.  I just cannot seem to report this item consistently for both Federal and NY.  

Please help.  Thank you!

[DaveT41]

I have the same issue.

[1597980]

Did you resolve this issue?

[DaveT41]

No. I just thought I would include it as Miscellaneous.

[ToddL99]

If you review the previous posts from @ToddL99 and @LenaH, the issue has been resolved.

Report the 1099-NEC as self-employment income on Schedule C. 

Answer "YES" when asked if "you played an active role in the business" - by accepting a job, you played an "active role".

This may not feel like a business (or self-employment) to you, but the U.S. tax code treats it that way for tax purposes.

All of the income is NY-source, subject to NYS tax. It doesn't make any difference whether the 1099-NEC included any state or city information. You can identify this income as NYS-income in the NY state tax interview.

[McCollum-2021]

Hello there,  I am confused on the process.  I recieved a 1099-NEC, however; I do not have a buisness or am i self employed.  So how am i to answer questions?