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Received 1099NEC for a bonus paid by FL for being First Responder. After entering bonus, it says I qualify for QBI deduction. I'm not self-employed. Is this correct?

This payment was a one time bonus for First Responders in the state of Florida for $1338.77. I expected to have more taxes to pay on the bonus, but Turbo Tax now says I qualify for the QBI deduction which greatly reduced the taxes (by $249) I owe on the bonus. I'm not sure how I qualify for a business deduction when I am not self-employed. I've searched a couple articles but I can't find anything reassuring because everything seems so vague. (I received my normal W2 from my employer.) I'm all for a lower tax bill, but only if its correct.
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RobertB4444
Expert Alumni

Received 1099NEC for a bonus paid by FL for being First Responder. After entering bonus, it says I qualify for QBI deduction. I'm not self-employed. Is this correct?

First, you need to delete the 1099-NEC that you have entered,  The reason that you are receiving a QBI deduction is that the system is treating this as self-employment income, which it is not.  So click the little trashcan to the right of the 1099-NEC that you have already put in.

 

Then, you need to re-enter the 1099.  Pay special attention to the questions as you go along.  On the third screen it says "Does one of these uncommon situations apply?" at the top.  The 4th selection says "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or Hobby (this is not common)."  Tick that box.

 

This was a one time benefit paid to you as a first responder (which is as sporadic as it gets).  It was certainly not earned as an attempt to earn money.  So there should be no self-employment taxes paid on it.  

 

@Msnatalieann 

 

 

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