If the 1099-NEC is for Tax year 2022, and you've already filed your 2022 return and received your refund, you will need to amend your 2022 return.
If you owe after you amend, there will likely be interest and a penalty as the taxes were due on April 15 of 2023 (for tax year 2022).
If you prepared the return yourself, you will amend the return. But fear not! TurboTax Experts can help you do this. Just click on the Live Help icon.
Assuming you used TurboTax's free product to file your 2022 return (since you only had a W2 and SSI), you will need to pay for the version that includes Self-Employment. When you start the amendment and add the 1099-NEC, the program will tell you you need to upgrade your tax product.
When you are issued a 1099-NEC, it means you're self-employed and have a "business" even if it's not a brick and mortar store. This means you can deduct expenses for the work you did as an independent contractor.
Here's a hypothetical:
- I run a flower business from home and make $1,000 in income (think of this as 1099-NEC income)
- I have expenses for the flowers and materials I use ($200)
I will report the 1090-NEC income under my "business" Schedule C $1,000
I will be able to deduct the expenses of $200 on my Schedule C
This means that my "business" made $800, and that's the amount you pay Self-Employment tax on. The amount will also get added to your other sources of income and be taxed accordingly (this is income tax).
Self-Employment tax covers your Social Security and Medicare taxes. When you're a W-2 employee, half of those taxes are paid by the company and half are paid by you. When you're self-employed, you pay both halves (although you get a tax adjustment for half of the amount). This "banks" up your Social Security and Medicare so that you have it when you retire.
Taxes and rules can be confusing! When you're an independent contractor, you're not given an instruction manual, so I'm including a couple links to helpful information for Self-Employed/Independent Contractors below.
My last suggestion: if you're Self-Employed, make sure you pay in some withholding at least each quarter (every 3 months). Remember, you don't have an employer taking it out of your paycheck before you get it, you have to do the withholding yourself.
TurboTax Self-Employment Tax Hub
TurboTax Self-Employment Tax
TurboTax Beginner's Self-Employed Tax Guide
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