Money reported on Form 1099-NEC is still income even if it is considered "sporadic", not part of an ongoing business, and therefore not subject to self-employment tax. The answers to the questions in the 1099-NEC section lead TurboTax to determine whether the income should be subject to self-employment tax.
At the question, "Does one of these uncommon situations apply?" you can indicate that this is "from sporadic activity or hobby (this is not common)" if it is a one-time payment.
Any self-employment tax that you pay adds to your Social Security account for retirement and to your Medicare account.
If the money is treated as subject to self-employment tax, the rate is 15.3% for 2022 (12.4% for Social Security taxes and 2.9% for Medicare taxes). You could easily have self-employment tax on net self-employment earnings, yet still have taxable income for income tax of zero.
If your income is less than your standard deduction, you generally won't have any income tax and it won't matter for 2022 whether you have a deductible IRA contribution.
To contribute to a traditional IRA, you, and/or your spouse if you file a joint return, must have taxable compensation, such as wages, salaries, commissions, tips, bonuses, or net income from self-employment. For tax years beginning after 2019, there is no age limit to contribute to a traditional IRA. Compensation for purposes of contributing to an IRA doesn't include earnings and profits from property, such as rental income, interest, and dividend income, or any amount received as pension or annuity income, or as deferred compensation. In certain cases, other amounts may be treated as compensation for purposes of contributing to an IRA, including certain alimony and separate maintenance payments received, certain amounts received to aid in the pursuit of graduate and postdoctoral studies, and certain difficulty of care payments received. See this IRS webpage for more information.
See this IRS webpage for more information about IRA contributions. Please also see this tax tips article for more information about deductible retirement contributions.
See this IRS webpage for more information about self-employment tax.
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