Do I use Schedule C for 1099-NEC?

[mln32567]

My husband retired in 2022. He had worked for a Recreation Commission as Aquatic Superintendent. As a certified American Red Cross Life Guard Instructor/Trainer, he trained/certified life guards as part of his regular job. He one of the few in the state. In the spring of 2023, his previous employer requested his expertise to train/certify the new guards and re-certify those nearing expiration. The previous employer paid all of the costs associated with American Red Cross, and then paid my husband hourly for his teaching/training. He was issued a 1099-NEC for this. Is the schedule C the correct form for this? And if so, how do I answer the "qualified trade or business" question? He worked less than 100 hours, and didn't have a "business" name/address, etc.

Also, because this really hasn't been a business, the rest of the form is difficult to answer. No accounting method, materially participate?, started or acquired but no start up expenses, etc.

Any help is appreciated!!

[TomK2023 · Accepted solution]

Yes, the 1099-NEC is the correct form.  Form 1099-NEC specifically reports Nonemployee Compensation, which you may have gotten in previous years on a 1099-MISC. So, if you worked as a freelancer or contractor last year, you probably got a 1099-NEC reporting how much money you were paid in box 1.

To enter your Form 1099-NEC in TurboTax:

1. Sign in and open or continue your return.
2. Search for 1099-NEC and select the Jump to link.
3. Answer the questions and continue through to enter the information from your form.
   • If you have multiple 1099-NECs to enter, you can select +Add Another 1099-NEC on the 1099-NEC Summary screen.

When you’re done, we’ll ask you a few questions and help you through entering any expenses you may have so that you can reduce your taxable income.

When you’re paid this way, there’s no withholding taken out of your income, which means you’ll pay both self-employment tax and income tax.

A benefit of being self-employed is that it enables you to have lots of write-offs, so make sure to enter all your expenses. This helps you reduce the taxes you might owe or increase your refund. We’ll help you get every possible tax break you deserve.

Enter his name as being the owner. 

Business name: e.g., Johnson Aquatic Certification Service. 

Use your address.  

Accounting method: Cash.  

Materially participated: Yes

Business code: I'd suggest "713900" for "Other amusement & recreation services (including golf courses, skiing facilities, marinas, fitness centers, bowling centers, skating rinks, miniature golf courses)."  The codes aren't specific enough for certain occupations, and you just have to go with what's closest.  Please see "Principal Business or Professional Activity Codes" starting on page C-17 of the IRS' 2018 Instructions for Schedule C if you'd like to search for a more appropriate code.

Started business in 2023: Yes

Made payments that required 1099: No

And yes, the program will compute your Self-Employment taxes (you'll get a partial credit for some of that SE Tax on another line of your 1040).

Hope this helps you get started.  Please ask more questions if you need additional guidance.