Where do I enter a Form 1099-NEC that I received from the Veterans Administration reporting a $100.00 prize I received in drawing of VA Health Survey participants?

[wrdealjr]

I called the VA Financial Services Center and asked why they sent the form.  They confirmed it was for the $100 prize.  When I asked if it was taxable income, they wouldn't say and referred me to my tax advisor.
 Since I'm not a VA employee or self-employed, I don't have a Schedule C.

[MinhT1 · Accepted solution]

If you receive a form 1099-NEC for a prize winning, then you are not considered as self-employed and do not need to file a Schedule C.

In TurboTax, enter your form 1099-NEC and follow the interview until you arrive at the page titled Did this involve an intent to earn money?. Answer that this did not involve an intent to earn money. The amount will be reported as Miscellaneous income and will not be subject to Self-employment tax.

In TurboTax, there is a work-around. Although you may receive this income every year, say that you only receive the 1099-NEC only in 2020, not in previous years and not in 2021, you will then have the screen where you can say that it did not involve an intent to earn money.

[wrdealjr]

Minh,

Thank you for the help with this.  I followed the interview, but didn't see an option to say there was no intent to earn money.  So, I want to check if this is entered in the correct location.

Based on your comment about Miscellaneous income, I looked and found that this $100 is now displayed on Line 8 (Other income) of Part 1 of Schedule 1.  The Business Income on line 4 is blank.

Please confirm this is correct.

Thanks again,

Robert

[JoannaB2]

Yes,  The form 1099-NEC is also used to report other income such as prize or incentives from employers, and it is reported on line 3 of 1099-NEC.  The amount entered showed as other income on line 8 of Schedule 1 on your 1040 income tax return.  It will be taxed as ordinary income based on your tax bracket

[wrdealjr]

Thank you for confirming this for me.