Dependent and 1099-NEC

Forum|Forum|4 years ago
February 22, 2022
1 reply
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After reading all the confusion about entering 1099-NEC forms received by my dependents, I'm still confused 🤔 🤔. My son is a dependent on my return and I am creating a return for him that says he can be claimed as a dependent on someone else's return. He is not self-employed nor does he own his own business.

I enter his 1099-NEC on his return and that is fine. It then says the 'Business Income and Expenses (Sch C)' section needs review. The first question in that section asks if you have any business income and expenses.

HOWEVER, and I quote, 'But before you say "yes", if you have 1099-MISCs or 1099-NECs, it's better to enter them under 1099-MISC and Other Common Income.'

Having already done that, is it still necessary to say 'Yes' to business income? It then asks for information that does not pertain to him (such as Business Code, Accounting Method and it asks for any 1099-NEC income again).

Thanks for the clarification, Val.

Vanessa A

Level 15

Yes, you need to answer yes to business income.

The fact that he has a 1099-NEC says he is likely performing some sort of business or independent contractor type work. If he is performing work for someone and not being paid as an employee, he needs to fill out a Schedule C, regardless of age. Schedule C is for independent contractors too.

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vtpecoAuthor

Level 2

Thank you. A couple of follow up clarifications....

I'm using 'Cash Method' as the accounting method and he did NOT play an active role in the business (he worked less then 500 hours).

I also did not re-input the 1099-NEC as it was already entered in the '1099-MISC and Other Common Income' section, and said the work is NOT qualified (QBI). His 1099-NEC was work work done as an intern at a college during the summer.

Thanks again for the help. Val.

vtpecoAuthor

Level 2

This gets even more confusing 😯. Based on my above assumptions, it's now asking for the parents tax information so the 1099-NEC income can be taxed at the parents rate. I thought by reporting the 1099-NEC on a Schedule C would NOT require it to be taxed at the parents rate. I've tried manually deleting form 8615 and 1099-NEC but form 8615 keeps getting automatically recreated.

This is getting ridiculous. All I want to do is enter a 1099-NEC that my son received while being a dependent on our tax return.