1099-NEC for Vacation Payout from Prior Employer

I received a 1099-NEC from a creditor, investor of my prior employer, which closed in June 2024. The creditor/investor’s company processed vacation payouts for us and issued the 1099-NEC. In TurboTax, should I report this on Schedule C? The payout is related to my vacation, not self-employment, and I am not an employee of the creditor, investor.

I would appreciate any guidance on how to properly report this in TurboTax.

Thank you for your help.

690

Expert Alumni

Mar 27, 2025 6:29:51 AM

No. This would not be considered self-employment income. Vacation pay should be reported on a W-2, not a 1099 -NEC as it is subject to employer withholding/ FICA taxes.

You can report the income by selecting the following:

Income
Miscellaneous Income
Other Income not already reported on a Form W-2 or 1099
Yes, to did you receive any other wages
Continue through until you get to Any Other Earned Income and select Yes
Select Employee compensation that was not reported on a W-2
Continue through answering the questions. Put a checkmark in the box that says you received a 1099-NEC
Select letter H- I received a form 1099-NEC that should have been submitted on a W-2

TurboTax will then include form 8919 with your return for uncollected Social Security and Medicare wages. This will have you pay 7.65% which is the amount that should have been withheld, instead of 15.3 which is the self-employment amount.

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1099-NEC for Vacation Payout from Prior Employer