1099 income

[Daveright]

All of my $12136 income for 2020 was from the Arizona state prison and was reported on a 1099.  No taxes were withheld.  I filed an information return to get my stimulus payment.  Since it was under the #12400 standard deduction, I did not show it.  My information return was rejected because I didn't actually request the rebate.  My uncle says that because the 1099 shows more than $600 that I have to report it as other income and pay self employment taxes on the full amount.  Which is correct?

[xmasbaby0 · Accepted solution]

Your uncle is correct.   When you have income reported on a 1099NEC, you have self-employment income.   If you work as an independent contractor and get even $400 it MUST be reported on a tax return and you have to pay self-employment tax for Social Security and Medicare-----even if you did not earn enough to exceed the $12,400 standard deduction amount.

And....you either have to use online Self-Employed or any version of the CD/download software to report self-employment income.   Since you have taken so long, you might have a hard time using online software.   I suggest using the desktop software.  Deluxe will work on a full PC or Mac--not on a mobile device.

IF you cannot be claimed as someone else's dependent then you need to use the recovery rebate credit in order to get the 1st and 2nd stimulus payments.

The stimulus check is an advance on a credit you can receive on your 2020 tax return.  If something went wrong or you did not get the stimulus check in 2020, you can get it when you file your 2020 return in early 2021

The Recovery Rebate Credit will be found in the FEDERAL REVIEW section. ( you should see "Let's make sure you got the right stimulus amount”)  If you are eligible it will end up on line 30 of your 2020 Form 1040.

Make sure that you enter ALL of the stimulus money received for the 1st and 2nd stimulus for yourself, your spouse and your children.

https://www.irs.gov/newsroom/economic-impact-payment-information-center-topic-j-reconciling-on-your-...

https://ttlc.intuit.com/questions/1901539-how-do-i-preview-my-turbotax-online-return-before-filing

Click on Tax Tools on the left side of the screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.

https://ttlc.intuit.com/questions/2903027-how-do-i-report-income-from-self-employment

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

(Did you have to purchase your own uniform, special shoes, any equipment, etc.?)

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

[Daveright]

Actually the 1099 was a 1099 misc.  Does that make a difference?

[xmasbaby0]

No----it is still self-employment income whether they used a 1099NEC or 1099Misc.   You have to report it on a tax return.   You will be paying 15.3% for self-employment tax.   If you have any expenses for clothes, shoes, boots, etc that you had to purchase for yourself, etc. put those expenses on a schedule C.  If you are not someone else's dependent you can get the EIP payments but you can expect the SE tax to be taken out of the EIP amount.   Your refund will end up on line 35a of your Form 1040.

[Critter-3]

A 1099-misc ?  Which box is the income reported in ?  

[Daveright]

The income was reported in box 3, other income.  I should explain, I AM the uncle.  She is still in prison and does not have access to the Internet.  She also did not file in 2019 and never received any notice that I am aware of.  She will also have income in 2021 and all was put in her retention fund which she does not have access to yet.  She will be released soon. 

[xmasbaby0]

Wait--what?    This is getting too confusing.   It seems you are asking this for a niece who is incarcerated?   If she is in prison how did she earn over $12,000 in prison?   Please explain that.   Your original question made it sound like she was working for the prison as an independent contractor---now you say she is an inmate.   What is the source of the income?

[Daveright]

Perhaps this isn't the forum for this but...She works online for a company that has an "office" inside the prison.  She makes roughly $5/hr. and overtime of which the prison takes 30% for "room and board".  She will have roughly $25,000 in retention pay and a good paying job working from home when she gets out after 3 1/2 years on a drug charge.  Instead of getting a W2 from the company, she gets a 1099 MISC from the prison.   It sure seems strange but it has its good points.