So how do we identify he as an independent contractor/self-employed or not since he works for her once in a blue moon? Reason I asked is I found this on IRS website and I am a little confused and want to understand fully...
If payment for services you provided is listed on Form 1099-NEC, Nonemployee Compensation, the payer is treating you as a self-employed worker, also referred to as an independent contractor.
- You don't necessarily have to have a business for payments for your services to be reported on Form 1099-NEC. You may simply perform services as a nonemployee.
- The payer has determined that an employer-employee relationship doesn't exist in your case.
If you weren't an employee of the payer, where you report the income depends on whether your activity is a trade or business. You're in a self-employed trade or business if your primary purpose is to make a profit and your activity is regular and continuous.
- If you're in a self-employed trade or business, you must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship). If you're self-employed, you'll also need to complete Schedule SE (Form 1040), Self-Employment Tax and pay self-employment tax on your net earnings from self-employment of $400 or more.
- There's no withholding of tax from self-employment income. As a self-employed individual, you may need to make estimated tax payments during the year to cover your tax liabilities. Refer to Form 1040-ES, Estimated Tax for Individuals for more details on who must pay estimated tax.
- If you're not an employee of the payer, and you're not in a self-employed trade or business, you should report the income on line 8j of Schedule 1 (Form 1040), Additional Income and Adjustments to Income PDF and any allowable expenses on Schedule A (Form 1040), Itemized Deductions. Refer to “Activity not for profit” in Publication 525, Taxable and Nontaxable Income for allowable nonbusiness expenses.
