Income reported on Form 1099-NEC is not reportable directly on your tax return. Just entering the information on that form is only one step. Since it is self-employment or 'non-employee compensation' it must be associated with a Schedule C, even if there are no expenses being claimed.
The information required for the Schedule C will include the type of business, the business name (or your name if there is no specific business name), the business address (or your address), etc.
Since income reported on Form 1099-NEC needs to be reported on Schedule C, the program is trying to tie these two forms together to be sure that it is reported correctly and on the right form.
Try going back to the section where you entered the Form 1099-NEC if you entered it on its own and delete that entry. Use these steps:
- On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
- This opens a box where you can type in “1099-NEC” and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
- The search results will give you an option to “Jump to 1099-NEC”
- Click on the blue “Jump to 1099-NEC” link
This will bring you to the summary of all Form 1099-NEC that you have entered. Click Delete or the trash can icon next to each one.
Next, you will re-enter the Form 1099-NEC as part of the Schedule C so that the income is reported directly as part of your Business Income and Expenses and within the correct form and section of your return.
Use these steps to go to the Schedule C section of your return.
- On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
- This opens a box where you can type in “schedule c” and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
- The search results will give you an option to “Jump to schedule c”
- Click on the blue “Jump to schedule c” link
If you already have a Schedule C in your return, edit it and go to the section to Add Income. This is where you will re-enter the Form 1099-NEC.
If you do not already have a Schedule C in your return, follow the prompts and enter the information about your work/business for which you received the Form 1099-NEC. Then continue through that section to Add Income and enter the Form 1099-NEC plus any other income you received for that self-employed business.
Don't forget you can also claim expenses related to your business.
After you are finished, the error condition should be eliminated.
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