Should I file a 1099 NEC from the state of Florida's First Responder Recognition Program? I started to and it seems to thing it' my spouses business? It's a bonus.

[DavidD66]

Yes, you should report it.  Since the "bonus" was reported on Form 1099-NEC, you will have to report it on Schedule C as self-employment income.  You will need your own Schedule C.  Do not report it on your wife's.  

[soccermaniac015]

I just figured this out! now I realized that I did it wrong on last years taxes and I should have gotten more money back. Ugh.

Report it on 1099 MISC form not 1099 NEC. Put the amount in box 3 of 1099 MISC. I had to read the back of the paperwork the State sent about 100 times and read forums to figure this stinking thing out. But my return went higher after I entered it in 1099MISC instead of the 1099NEC category which wanted me to create a Schedule C for a non existent self employment business. Making a note for next year in case we get this again. 

[DianeW777]

If the income is reported on Form 1099-NEC, you would not convert it to a 1099-MISC.  The Form 1099-NEC is self evident that it would be considered self employment income.  However, if you believe with confidence this would represent a hobby instead of a business you could choose to report it as a hobby. The business income allows you to deduct ordinary and necessary expenses needed to earn this income, while hobby does not allow expenses to offset the income at all.

This IRS link will help you: Business or Hobby?

Key elements:

1. A hobby requires you to report the income you received and under the current tax law, Tax Cuts and Jobs Act (TCJA), no expenses are allowed to be used to reduce the money collected even if you itemize deductions.
2. A business allows you to deduct the costs necessary to obtain the income.  The law explains that 'you must be engaged in the activity to produce a profit'.  The test under IRS tax law is that you must show a profit three out of every five consecutive years to be considered a business.

Once you decide what type of income this is you can use the links below to see how to report.

• How do I report income from self-employment?

To enter hobby income and expenses in TurboTax please follow these steps:

1. Once in your tax return, Choose Wages and Income
2. Scroll down to Less Common Income and click Start to to right of Miscellaneous Income, 1099-A, 1099-C
3. Click Start to right of Hobby income and expenses

[soccermaniac015]

Well the back of the 1099 NEC we received clearly states: "If you are not an employee but the amount in Box 1 is not self employment income, report the amount shown in Box 1 on the other income line (on Schedule 1 (Form1040))." 

We are not direct employee's of the State nor are we self employed and the income is supposed to be a gift/bonus. So the only way to get it to other income line is by adding it as 1099MISC. 

[PatriciaV]

To enter a Form 1099-NEC that is not for self-employment:

Open your return and go to Federal >> Wages & Income >> Other Common Income >> Income from Form 1099-NEC. Click Start/Update.

Or enter 1099-nec in the Search box located in the upper right of the program screen.  Click on Jump to 1099-nec.

1. On the screen Did you get a 1099-NEC?, click on Yes
2. On the screen Do You Want to Enter Your 1099-NECs Now?, click on Add a 1099-NEC
3. On the screen Let's get the info from your 1099-NEC, enter your information and click Continue
4. On the screen Describe the reason for this 1099-NEC, enter a reason and click Continue
5. On the screen Does one of these uncommon situations apply? Select This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby and click Continue.

These entries will report the income on Schedule 1 Line 8z Other Income. The total from Schedule 1 Line 10 flows to Form 1040 Line 8 as ordinary income.

@diakmc 

@soccermaniac015 

[Kevinbso2]

@PatriciaV 

When I follow your instructions and Jump to 1099-NEC, it presents me a different flow:

1. On the screen Did you get a 1099-NEC?, click on Yes
2. What type of income is on your 1099-NEC? Options are:
   1. Self employment income

      Farm income
      Hobby
      Lawsuit settlement
      Medicaid waiver payments that qualify as difficulty of care
      Income that should've been reported on a W-2

      Is there a reason I'm only seeing the Hobby option alone opposed to the "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby?"

[LeticiaF1]

Go back to the 1099-NEC:

1. Enter 1099-NEC in the Search box located in the upper right of the program screen
2. Click on Jump to 1099-NEC
3. Click on Add a 1099-NEC
4. On the What type of income is on your 1099-NEC?
5. Select Hobby
6. Enter the information from your form

@Kevinbso2 

[harezaza]

What if Turbo Tax does not give the option to write your own description? It only gives the following options: Self Employment, Hobby, Lawsuit settlement, income that should've been reported on a w-2, and Medicare waiver. 

[RobertB4444]

Hobby is the option that you want in this instance.  It tells the system that the 1099-NEC is for something you didn't do as a primary job so it won't charge you self-employment tax on it.

@harezaza 

[Krokus646]

I’ve been having the same issue too but after I select “hobby”, it tells me that I need to submit a SS-8 form to the IRS. So, I’m confused.

[RobertB4444]

Form SS-8 requests that the IRS give you a determination if you are a contractor or an employee.  Sometimes those fall into a gray area where someone is not sure if they should be treated as an employee.  The system is telling you in this instance that - since the bonus was reported on a 1099-NEC - the form used indicates something different than what you are entering.  The 1099-NEC says you are a contractor, you are saying this is hobby income.  

Since this bonus has been indicated by your employer that it is not self-employment income then you should ignore the warning to submit an SS-8 and move on.

@Krokus646