Hi!
Thank you for your reply!
To clarify- I am filing this as a hobby. I've looked over the criteria, and fully believe it's a hobby, and my CPA does as well (I filed with my CPA, this question I am asking is for my brother, who I am helping out, and he uses TurboTax Online). However, when speaking with him, he said his one fear here is since the 1099 is a NEC and MISC, the IRS will be expecting a Schedule C to be filled out.
Again, he still said we can file it as a hobby. But since the IRS will automatically want a schedule C filled out whenever someone gets a NEC, he suggested to fill out the Schedule C, then put in an "other expense" for the entire amount of the income, with a note that says "Non-SE income, filing as Hobby on Schedule 1, listed as Other Income." Then on the 1040, you list the amount to file as a hobby.
To reiterate- he thinks this is cleaner because he thinks if you ONLY do it as other income, especially when going through a computer system, he is afraid the IRS system might automatically flag a 1099-NEC without a corresponding Schedule C, EVEN IF filing as a hobby. So that is how he said he would file it if he was doing the taxes on his end.
Which brings me back to here- What I want to know is, if I put 1099-NEC as Hobby Income on the TurboTax Online filing system, how does that get sent to the IRS? I would imagine it's just on the 1040, and there is no corresponding 1099-NEC. So is this automatically going to be flagged when the two online systems talk to each other? Or does the IRS system see the 1099-NEC but also see that I selected hobby?
Additionally, is there a way to do it the way my accountant suggested? Where I can add it as SE but expense it, then add as hobby as well?
Again, long story short- I know the differences between hobby and SE, and I know how and why my accountant would do his approach. But I also think it's different when filing on online software and want to be smart here.
Hope that made sense!!
