1099-NEC

[flyjanl3]

I received a 1099-NEC. It was the amount my company paid for my company required flight training. It was the cost of the course I had to take. It was paid directly to the the school  not to me. Is this taxable, FED and PA? Thanks.

[ZoltanB45]

It was paid directly to the school and gave you the 1099 because you were the beneficiary. You will have to include the 1099, but will be able to write off the cost of the class, which should equal the 1099 amount.

[flyjanl3]

How do I write off the cost of the class? I never received an type of invoice from the training center.

[ZoltanB45]

You would enter the 1099 in the self-employment section. After being asked to describe the business, you enter the income.  Then you would be asked about expenses related to the job.  There will be a list to select from. Toward the bottom, education would be in the "other miscellaneous expenses" section.

[flyjanl3]

Thank you. So, essentially no tax will be paid on it since the payment was 4500 and the expenses were 4500, right? I used schedule C, is that correct? Thank you.

[AliciaP1]

Yes, this is the most accurate way to report your situation.

[flyjanl3]

The only thing is, the schedule C requires you to name your company and asks a bunch of financial questions regarding that, but there really is no “company “?

[JulieS]

You can choose the option to use your own name and address as the business name and address, which is the correct thing to do in this situation. 

[flyjanl3]

I was told this is taxable and I can not turn around and use it as an education expense on federal taxes but can use the education expense on PA taxes? Is this correct or is the previous post correct? So confusing. Thanks.

[ZoltanB45]

Your employer paid you to get the training. There is a reason they didn't add it to your w-2 but rather a 1099. You can directly deduct it on your schedule c as I mentioned.  

[flyjanl3]

Thank you! I appreciate your help! 

[Hal_Al]

@ZoltanB45  said: "There is a reason they didn't add it to your w-2 but rather a 1099. "

Don't we need to know what that reason is?  I'm of the opinion, that the employer did it wrong. If this was required job training, it did not need to be reported at all; not on the W-2 and not on a 1099-NEC.  And not on a 1099-Misc. 

Why did the employee need "flight training"?

That said, filing Schedule C (and taking the deduction) may be the simplest solution. 

@JulieS @AliciaP1 

[flyjanl3]

The flight training required was for a rating required by the FAA. The employee has to have the rating to be hired, but most don’t get the rating on their own, the company provides it. You aren’t getting paid during this time and aren’t “technically” an employee until the training is completed. 

[Hal_Al]

Ahhhh.  "You aren’t technically an employee" probably makes the 1099-NEC the correct way to do it. There's an argument that would say the 1099-Misc may have been better. 

"The employee has to have the rating to be hired" means the training may not be deductible. Educational expenses to improve your current job skills are deductible. But courses to qualify for a  new job are not.  The interpretation of that rule is a little fuzzy in your case; as your "self employment income" is dependent on having this rating.  I would probably file Sch C and  take the deduction. 

[TomD8]

@flyjanl3 --

If you received a 1099-NEC the IRS computers are going to look for a Schedule C on your return.