I am a full-time salaried employee and I receive a W2 for my wages. However, in 2020 I took an extra side-job at another company and made some additional income, around $5000. For this work I received a 1099-NEC, with the amount reported in Box 1. When I enter this information into TurboTax Delux 2020, TT does not by default create a 1040-SE nor a Schedule C, instead it reports that $5,000 as "Other Income". This reduces my tax liability significantly since it does not make me pay Self Employment tax. However, from the articles I have read, it seems I might have to pay SE tax on that money. So my questions is this, is there some reason that I would not have to pay SE tax on this income, or am I somehow using TT Delux 2020 wrong (or even a "glitch" in the program) where it is not asking me to pay SE tax when I should have to? (Note that if I report expenses against this income, TT does create the Sch-SE and Sch-C, yet it would be greatly more advantageous for me to not do it that way.)
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You do need to pay self employment taxes on those wages. This is actually a self-employment situation. TurboTax is correct in allowing you to deduct expenses and in creating the Schedule C and Schedule SE.
Thank you MaryM428, that information is very helpful, I am in total agreement with the advice you gave me. However the only issue I'm having is the way that TT Deluxe 2020 treated that 1099-NEC income when I entered it in. Clearly (as I know now), if I have an amount in box 1 of a 1099-NEC, that is Self Employment income. Yet when I enter it in exactly that way, TT Deluxe by default puts it into "Other Income". This is a bit troubling and misleading. I have been using TT Deluxe for many years now, and I have come to expect TT to put my income amounts into the correct categories, especially when it comes to extremely common things like simple 1099 income. But in this case, after having entered it in all correctly (there's not much to get wrong there), TT puts it into the wrong place. Yes I know I can easily tell TT to make that into SE income and it will create the Sch-C and Sch-SE for me, but it was quite misleading to me that it didn't do it that way as it's initial action. I'd be curious to know if Intuit has an explanation for this.
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