The manufacturer incentive payment (which is commonly called a spiff) is not self-employment income or business income, and you do not report it on Schedule C. Do not enter the 1099-NEC in TurboTax. Instead, follow the steps below to enter the income.
- In TurboTax Home & Business click the Personal Tab. (In other versions click the Federal Taxes tab.)
- In TurboTax Home & Business click Personal Income. (In other versions click Wages & Income.)
- Click "I'll choose what I work on."
- On the screen "Your 2020 Income Summary," scroll all the way down to the last section, "Less Common Income." Click the Start button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."
- On the next screen, "Let's Work on Any Miscellaneous Income," scroll down and click the Start button for the last topic, "Other reportable income."
- The next screen asks, "Any Other Taxable Income?" Click Yes.
- On the next screen, "Other Taxable Income," enter a description and the amount. For the description enter "Manufacturer incentive payment from 1099-NEC". Click Continue.
- On the next screen click Done.
The income will be reported on Schedule 1 line 8 with the description that you entered. This is the correct way to report it.
The IRS is supposed to recognize the description "Manufacturer incentive payment" as meaning that the 1099-NEC is not self-employment income. I don't know how reliable they are about recognizing it. You might get a letter from the IRS saying that you should have filed Schedule C and Schedule SE, and that you owe self-employment tax on the payment. If that happens, you will have to reply to the letter explaining that the payment on the 1099-NEC was a manufacturer incentive payment, and not self-employment income.
