Do I have to file a schedule C if I get an 1099-NEC?

[crispone]

I get paid a small stipend for some work i do with a local school. I do it personally and not through any kind of business I've started. While going through Smart Check, TT asked me about "qual business income - yes/no/no entry" on Schedule C. Must I include schedule C? If so, what determines whether I choose Yes / No or no entry for this question?  Thanks so much!

[AmyC]

The school paid you a flat sum and you did not pay any Medicare, social security, federal or state tax on your income. The IRS collects the FICA taxes through the self-employment tax. So if you owe FICA taxes, you must file as a business to pay the taxes.

See Hobby or a Business.  to start your quest. If the school paid you on a 1099-NEC like a contractor, you may have some business income. Otherwise, you may be able to not pay the FICA taxes and claim it as hobby income.

[crispone]

Now I'm more confused. The school did send me a 1099-NEC, so I'm assuming the stipend is considered business income. When I look up Schedule C on the IRS, I see that the form is for reporting income or loss "from a business you operated or a profession you practiced as a sole proprietor." It's not through a business I operated so I'm assuming it's the latter. That led me to look up sole proprieterships. On that page I see that if I'm liable for self-employment tax then I should be using schedule SE. 

Turbotax seems to think I'm liable for self employment tax, based on how much my owed taxes jumped after entering the amount reported on the 1099-NEC (it looks like I owe about 28% of that back in taxes!), but if that's the case, why did Turbotax use schedule C vs. SE?

Also, what address should I report on Schedule C? Is that the address where I'm performing the work, or the address of the "business." It's confusing to me because, again, I didn't start a business. It's just me doing some work for a school. Thanks!

[VolvoGirl]

You fill out schedule C to report the income and expenses.  Then the Net Profit is taxed on Schedule SE.  You need both C & SE.  

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from Schedule C self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit (If it is greater than $400). The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare (FICA). So you get social security credit for it when you retire.

The SE tax is already included in your tax due or reduced your refund. It is on the 1040 Schedule 2 line 4 which goes to 1040 line 23. The SE tax is in addition to your regular income tax on the net profit.

You use your own name and address.  Yes the IRS considers you are the owner of your own self employment business. You are in business for yourself. Use your own info. The people or company that pays you is your customer or client. You need to fill out schedule C for self employment business income. You are considered to have your own business for it. YOU are the business.

[Carl]

Here's the bottom line.

If you received a 1099-NEC with income reported in box 1, then as far as the IRS is concerned you earned that money while self-employed and "in business" for yourself. Understand that one does not have to "own" a business, to be considered "in" business.  Your comment, "I do it personally" further confirms that you are in fact, in business for yourself in the process of earning that income, as far as the IRS is concerned.

That 1099-NEC income will be reported on SCH C as a part of your personal 1040 tax return. Note that in the SCH C section of the program you will also be able to deduct from that business income, any qualified business expenses you may have incurred in the process of "doing it yourself".