Retirement tax questions

The GrubHub income was earned by your mother but has been reported under your Social Security number.  You have received an IRS form 1099-NEC reporting the gross income that was earned by your mother.

First of all, create a new account that correctly reports your mother's GrubHub income next year.

Second, this is your mother's income.  She is required to report the income whether she received a 1099 form or not.  Your mother will be able to access the information in the account to report her GrubHub income and expense on an IRS form Schedule C in her 2023 Federal 1040 tax return.

Third, the IRS form 1099-NEC is reporting income to your Social Security number and the IRS will be expecting you to report that income.

Reporting 1099-NEC income as something other than Schedule C income is not common.

However, to report 1099-NEC information as hobby income or other income follow these steps:

• Select Federal from the left side menu.
• Click on Wages & Income.
• Scroll down to Other Common Income.  Click Show more.
• Click Start / Revisit to the right of 1099-NEC.
• At the screen Describe the reason for this 1099-NEC, enter the reason for this income.
• At the screen Does one of these uncommon situations apply?, select This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby.

The entry will be reported:

• on line 8j of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

Then reverse the income 

Hobby income may need to be reversed if some or all the income reported on the 1099-K is not accurate.  Post the negative entry as follows:

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Scroll down to Less Common Income and click on the dropdown menu.
• To the right of Miscellaneous Income, 1099-A, 1099-C, click the Start / Revisit button.
• To the right of Other reportable income, click the Start / Revisit button.
• At the screen Any Other Taxable Income, click Yes.
• At the screen Other Taxable Income, enter a description such as “GrubHub income reported in error” and a negative amount.
• Click Continue. 

The entry will be reported:

• on line 8z of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

Make sure that you keep records and justifications in writing of all these transactions. Later, you may need to demonstrate to the IRS that this was not your taxable income.

@brandy-marie