Your wife may have received Form 1099-NEC or 1099-MISC, which TurboTax usually classifies as self-employment income. It is often furnished to independent contractors or small business owners and is classified as self-employment income which is subject to self-employment taxes of 15.3%. You also get taxed your regular income tax rate and your state taxes.
If this is for self-employment income, you can also reduce the income by any ordinary and necessary expenses that you paid to earn that income. This is reported in the Federal > Wages & Income > Self-Employment section of your return.
In some rare cases, a Form 1099-NEC is issued and should not be subject to self-employment taxes. This is if the activity was not entered into by your wife because she was seeking profit, but more as a hobby. In that case, it needs to be entered differently. You would enter it in the Federal > Wages & Income > Other Common Income > Form 1099-NEC section. After entering the form, TurboTax asks Do any of these uncommon situations apply? Answer This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby.
If this income is from a hobby, you will not be able to reduce the income by any expenses, except the cost of goods sold. You will also want to delete any information pertaining to self-employment on your tax return if you report it using this method. This TurboTax article may help you determine if your wife's activity should be classified as a business or a hobby.
