topic Re: 1099-NEC in Retirement tax questions

1099-NEC

Anne61 — Sat, 22 Mar 2025 19:34:10 GMT

I received a 1099-NEC from an energy company for oil and gas lease. Why is this a sole proprietorship? I don't know how to answer this questions on the Schedule c. My information or the Energy companies?

Re: 1099-NEC

DianeW777 — Sat, 22 Mar 2025 19:40:04 GMT

This should be reported as rental income and the Form 1099-MISC would have been the correct reporting form is you are not actively participating in the extraction of gas or oil.

First delete the form and then follow the instructions in the link to report the rental or royalty income. Royalties only occur if the extraction is actually taking place. Rental income is the category if there is a lease, without action of extraction right now.

Where do I enter income and expenses from rental property?
There may be no expenses is there is no extraction yet. Once extraction begins and the income is royalty, you would be allowed a 15% depletion allowance.

Delete this form --1099-NEC----.

If you're using TurboTax Online software and need to delete a form, click here.
If you're using TurboTax Desktop software and need to delete a form, click here.

Re: 1099-NEC

Anne61 — Tue, 25 Mar 2025 13:21:02 GMT

I reached out to the company and they say the 1099 nec is correct because I am a working interest owner but gave me no guidance on how to fill out a schedule c which turbo tax makes me do.

Anne61

Re: 1099-NEC

Vanessa A — Tue, 25 Mar 2025 13:27:09 GMT

When you enter the 1099-NEC, TurboTax will walk you through the questions needed to fill out the Schedule C. If you walk through the questions step by step, the form will be filled out for you.

If you have no expenses to report, then it is as simple as just filling out the 1099-NEC.

Re: 1099-NEC

Anne61 — Tue, 25 Mar 2025 22:59:26 GMT

When I fill out the schedule c on turbo tax, it asks for a principal business code which I don't have because it is not my business.

Anne61

Re: 1099-NEC

DawnC — Tue, 25 Mar 2025 23:01:37 GMT

Use 999999. You are considered self-employed for that income on Form 1099-nec. You can answer NO to the did you have employees or send out 1099s questions. The income on Form 1099-NEC is considered self-employment, so you are setting up a Schedule C to report your income and expenses on. You should be answering those questions as you are considered to be owning your own business. Use your name and home address for the business form.

I need to enter a 1099 - Am I Self-Employed?

What self-employed expenses can I deduct?

@Anne61

Re: 1099-NEC

VolvoGirl — Tue, 25 Mar 2025 23:03:10 GMT

But you do have your own business for it. Yes you are the owner of your own self employment business. You are in business for yourself. Use your own info. The people or company that pays you is your customer or client. You are considered to have your own business for it. YOU are the business.

You need to fill out schedule C for self employment business income and pay self employment tax in addition to regular income tax on it. The SE tax is to pay Social Security and Medicare tax that wasn't taken out like on a W2.

You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version.

How to enter income from Self Employment

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/26653

Schedule C line B Business Code is a 6 digit number for your activity. Here are the IRS instructions for Schedule C. Business codes start on page 18. If you can't find a code that applies, you can enter 999999.

http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

See the FAQ on Business Codes,

https://ttlc.intuit.com/community/business/help/what-is-the-business-code-used-for/00/25672