Yes, it was a mistake and you can try getting your employer to correct it, but they'll, most likely, just tell you that's the way it is. But, that may be be a bad thing. The
IRS considers anything in box
7 of 1099-MISC to be self employment income. Enter the 1099-Misc
income, at the 1099-MISC screen under "Other Income"/1099-MISC,
select "My Business". TurboTax (TT) will complete Schedule C for you
and allow you to deduct any expenses associated with this income. You'll also
have to pay self employment tax (social security) on any profits greater than
$400. The good news is: by doing it this way you get to deduct your travel
expenses directly from the income, on schedule C. If you report the income any
other way, your expenses are only deductible as an itemized employee expense,
subject to the 2% of AGI threshold. Since this "Business activity" is
"not for profit", you may not deduct more than the 1099 amount. That
is, you can't show a loss. If your expenses do exceed the 1099 amount, you
could theoretically deduct the excess as an itemized deduction, but it's
unlikely that you would exceed the 2% of AGI threshold.
