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Level 2
posted Feb 1, 2024 12:42:09 PM

SUBSTITUTE Form 1099-NEC OMB No. 1545-0115 - Why and how?

I received said form for Royalties (Box 2) received on microshares owned in Hilcorp Energy Company.  In the past, and currently from other companies, I received a 1099-MISC to report royalties.

 

If I enter this as a 1099-NEC, Turbotax generates a Schedule C for a non-existent business.

If I enter this as a 1099-MISC, which is how it reads except for the name of the form, all is easy-peasy and in accord with other royalty reporting.

 

Which do I do?

 

Is this 1099-NEC serving as a SUBSTITUTE for the 1099-MISC (which is OMB No: 1545-0115)?

 

Have they issued 1099-NEC forms to everyone, even those who have not acted as a business to sell them anything??

 

I've called Hilcorp, but was either put on perma-hold or shuttled to voicemail. Still waiting for a response.

0 2 1418
1 Best answer
Expert Alumni
Feb 1, 2024 2:17:50 PM

The forms are not interchangeable. A corrected form is nice but doesn't sound expected and they could mess that up too. Let's go with what we have. You can't enter the 1099-NEC or you get a business so we will fudge things.

Enter as 1099-MISC with the royalty income where it belongs. Your taxes are correct. 

 

Depending on the amount, the IRS may want to know why you didn't report the 1099-NEC. You may want to make a couple more entries to help explain the situation. You can add the NEC income and description, then remove the income. This helps clear up what you were doing and why you added the NEC.

 

First enter the income:

  1. go to the federal income section
  2. scroll to the bottom
  3. Miscellaneous Income, 1099-A, 1099-C, Start
  4. Scroll to the bottom
  5. Other reportable income, Start
  6. Other taxable income?
  7. Select YES
  8. Description erroneous 1099-NEC
  9. Amount, enter your amount
  10. Continue

 

Subtract the income:

  1. Miscellaneous Income, 1099-A, 1099-C, Start
  2. Scroll to the bottom
  3. Other reportable income, Start
  4. Other taxable income?
  5. Select YES
  6. Description erroneous 1099-NEC
  7. Amount, enter your negative amount
  8. continue

2 Replies
Expert Alumni
Feb 1, 2024 2:17:50 PM

The forms are not interchangeable. A corrected form is nice but doesn't sound expected and they could mess that up too. Let's go with what we have. You can't enter the 1099-NEC or you get a business so we will fudge things.

Enter as 1099-MISC with the royalty income where it belongs. Your taxes are correct. 

 

Depending on the amount, the IRS may want to know why you didn't report the 1099-NEC. You may want to make a couple more entries to help explain the situation. You can add the NEC income and description, then remove the income. This helps clear up what you were doing and why you added the NEC.

 

First enter the income:

  1. go to the federal income section
  2. scroll to the bottom
  3. Miscellaneous Income, 1099-A, 1099-C, Start
  4. Scroll to the bottom
  5. Other reportable income, Start
  6. Other taxable income?
  7. Select YES
  8. Description erroneous 1099-NEC
  9. Amount, enter your amount
  10. Continue

 

Subtract the income:

  1. Miscellaneous Income, 1099-A, 1099-C, Start
  2. Scroll to the bottom
  3. Other reportable income, Start
  4. Other taxable income?
  5. Select YES
  6. Description erroneous 1099-NEC
  7. Amount, enter your negative amount
  8. continue

Level 2
Feb 2, 2024 10:53:47 AM

Thank you AmyC. Very helpful!