1099-MISC income reporting issue

[Kry3333]

My wife is a stay at home mom but this year a friend of ours recruited her to do occasional work with their small business.  The business provides cleaning services & my wife would help them clean from time to time (schedule was completely random).  My wife total income was $1865 for this (no other income for the year).  My wife received a 1099-MISC & I am inputting that into our taxes(MFJ).  I am surprised to find out that not only is that income, but TT (and Uncle Sam) appear to treat her as a small business with income & are filling out schedule C.  We didn't track any "expenses" so there are no deductions to mention. Now I am filling out information on business income that I am not sure about - i.e. is this QBI? are these "wages"?  The questions are getting deeper than I expected so I am wondering if I reported the income correctly, or did I answer a question incorrectly somewhere along the way?

[JohnW152 · Accepted solution]

No, it sounds like you're doing this correctly.  It is taxable, and it's subject to self-employment tax. 

For IRS purposes, your wife would be considered an independent contractor and self-employed, and so the TurboTax program is populating the Schedule C you're seeing. 

And, since she was self-employed, the program will also be completing a Schedule SE for self-employment tax.  This reflects the equivalent of what's withheld on a Form W-2 for Social Security and Medicare.

Please see the TurboTax Help article Am I considered self-employed? for more information.

You might see if you can recreate any expenses she may have incurred by going through old credit card or bank statements.

Income from work reflected on Form 1099-MISC is considered Qualified Business Income (QBI).  It's not considered wages, but it's income that will provide your wife with something of a tax deduction.