Solved: 1099-MISC box 7 confusion
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emmelinegb
Level 1

1099-MISC box 7 confusion

Hi there,

 

Can anyone help me make sense of this 1099-MISC form I received? From this particular direct sales company, I received two forms: One was a 1099-NEC, which only includes my leadership earnings (bonuses, downline commissions). The second one was a 1099-MISC which doesn't report any income but has box 7 checked to indicate that I resold a certain amount of goods. 

 

This form seems pretty useless, but at the same time I don't want to not acknowledge it on my taxes as that seems illegal. However, in TurboTax, the box 7 option seems to be missing altogether! With no income listed, the form doesn't seem to be saving properly in the TurboTax system. Also, the consensus on other threads seems to be that 1099-MISC box 7 is now replaced by some other box on 1099-NEC?? In which case, did they just do it wrong?

 

I've already entered that chunk of income as other self-employed income (schedule C). Any advice on what to do about this weird 1099-MISC form?

1 Best answer

Accepted Solutions
AmyC
Employee Tax Expert

1099-MISC box 7 confusion

You got the NEC for  leadership, service, etc. You got the 1099-MISC because you sold over $5k in goods. Two different things. This lets the IRS know that you were moving product. The IRS has a copy and is aware. If that is the only box marked on your form, it does not go on your tax return. It is informational. The IRS knows, You know the IRS knows. Make sure you account for the product you moved in your return.

 

Here is what each one is for:

The 1099-NEC is for each person to whom the taxpayer has paid at least $600 during the course of a business for the following.

•Services performed by someone who is not an employee, including parts and materials (box 1),

•Cash payments for fish (or other aquatic life) purchased from anyone engaged in the trade or business of catching fish (box 1), or

•Payments to an attorney for legal services (box 1).

 

The Form 1099-MISC is for each person to whom the taxpayer has paid the following during the course of a trade or business.

•At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest,

•At least $600 in rents (box 1), prizes and awards (box 3), other income payments (box 3), the cash paid from a notional principal contract to an individual, partnership, or estate (box 3), any fishing boat proceeds (box 5), medical and health care payments (box 6), crop insurance proceeds (box 9), payments to an attorney (box 10), IRC section 409A deferrals (box 12), or nonqualified deferred compensation (box 14).

•Any payment from which federal income tax has been withheld (box 4) under the backup withholding rules

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7 Replies
macuser_22
Level 15

1099-MISC box 7 confusion

The 1099-MISC box 7 for non-employee compensation  has been replaced with the new 1099-NEC.

 

The 1099-MISC box 7 only has a checkbox to indicate that the issuer of the form made $5,000 or more direct sales to you.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
emmelinegb
Level 1

1099-MISC box 7 confusion

So, you're saying they just did it wrong? And I shouldn't worry about not including the form? Or what are you saying?

AmyC
Employee Tax Expert

1099-MISC box 7 confusion

You got the NEC for  leadership, service, etc. You got the 1099-MISC because you sold over $5k in goods. Two different things. This lets the IRS know that you were moving product. The IRS has a copy and is aware. If that is the only box marked on your form, it does not go on your tax return. It is informational. The IRS knows, You know the IRS knows. Make sure you account for the product you moved in your return.

 

Here is what each one is for:

The 1099-NEC is for each person to whom the taxpayer has paid at least $600 during the course of a business for the following.

•Services performed by someone who is not an employee, including parts and materials (box 1),

•Cash payments for fish (or other aquatic life) purchased from anyone engaged in the trade or business of catching fish (box 1), or

•Payments to an attorney for legal services (box 1).

 

The Form 1099-MISC is for each person to whom the taxpayer has paid the following during the course of a trade or business.

•At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest,

•At least $600 in rents (box 1), prizes and awards (box 3), other income payments (box 3), the cash paid from a notional principal contract to an individual, partnership, or estate (box 3), any fishing boat proceeds (box 5), medical and health care payments (box 6), crop insurance proceeds (box 9), payments to an attorney (box 10), IRC section 409A deferrals (box 12), or nonqualified deferred compensation (box 14).

•Any payment from which federal income tax has been withheld (box 4) under the backup withholding rules

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amirss20
New Member

1099-MISC box 7 confusion

Hi there,

My wife and I filled jointly. She has a part-time job in a pharmacy and her employer gave her the 1099-MISC form with just box 7 filled in which is less than 5% of my income and Turbo tax does not have box 7 as an active field.

please guide me on how should I file this amount via Turbotax?

macuser_22
Level 15

1099-MISC box 7 confusion


@amirss20 wrote:

Hi there,

My wife and I filled jointly. She has a part-time job in a pharmacy and her employer gave her the 1099-MISC form with just box 7 filled in which is less than 5% of my income and Turbo tax does not have box 7 as an active field.

please guide me on how should I file this amount via Turbotax?


The payer is using an outdated form.   Non-employee compensation must be reported on the new 2020 1099-NEC form.  For 2020 box 7 is only a check mark for a different purpose on the 10999-MISC form.    You should ask the payer for the correct 2020 1099-NEC form.

 

https://www.irs.gov/pub/irs-pdf/f1099nec_20.pdf

https://www.irs.gov/pub/irs-pdf/f1099msc_20.pdf

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
WightRanger43534yer23
New Member

1099-MISC box 7 confusion

Where do I enter non employee compensation? Like i'm in the correct section in TurboTax, but where do I copy and paste the dollar amount into TurboTax from my 1099-NEC specifically?

LinaJ2020
Employee Tax Expert

1099-MISC box 7 confusion

You will need to enter the information in both Form 1099-NEC and Schedule C sections.  You would start from the 1099-NEC section under "1099-MISC and Other Common Income".  You would then follow prompts to tell the program you are filing a Schedule C.  As it creates a Schedule C for you, you will need to go to the Schedule C portion separately to confirm your income amount, add related expenses and complete required information. 

 

In TurboTax online, here are the steps: 

  • Sign into your account, select Pick up where you left off
  • From the upper right menu, select Search and type in 1099nec and Enter
  • Select the Jump to 1099nec
  • Follow prompts to complete the section

Then 

  • From the upper right menu, select Search and type in schedule c and Enter
  • Select the Jump to schedule c
  • Next screen, "Your 2020 work summary" under your self employed business, select Review
  • Continue to enter related expenses and other required information

 @WightRanger43534yer23

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