The IRS instructions for a deceased employee's accrued vacation pay are to include the amount on a 1099-MISC. The vacation pay should not have been reported on a 1099-NEC, but there is a way to enter the income without creating a business.
Here are the instructions to enter the 1099-NEC without creating a Schedule C business.
- Search for 1099-NEC with the magnifying glass
- Click on Jump to 1099-NEC link
- Click Add a 1099-NEC
- Enter the information on the form and follow the prompts
- On the page titled Guess what? You can deduct expenses for the example work, choose No I have no expenses to deduct
- Follow the prompts on the screen
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