1099-MISC

[smarcy18]

I am a teacher and I attended a workshop where I was paid a stipend.  I was sent a 1099-MISC and Turbo Tax has be filling out a schedule C; this just does not seem correct?  Any ideas?

[KatrinaB48]

Was the income reported in box 7 or box 3 of form 1099-misc?

[smarcy18]

Box 7

[HelenC12]

To enter your stipend reported on Form 1099-Misc so it doesn't generate a Schedule C:  

1. Sign in to TurboTax and select Take me to my return.
2. Search for 1099-misc.
3. Select the Jump to 1099-misc link in the search results.
4. Select Yes to Did you get a 1099-MISC?
5. If you need to enter another 1099-MISC, select Add Another 1099-MISC to enter a new one.
6. Enter the information from your 1099-MISC.
7. If your form has an amount in more than one box, you’ll need to enter them as separate 1099-MISC forms. We’ll help you with that.
8. On the Describe the reason for this 1099-MISC screen, enter a reason then Continue.
9. On the Does one of these uncommon situations apply? screen, select None of these apply then Continue.
10. On the Did the XXX involve work that’s like your main job? screen, select No, it didn’t involve work like my main job then Continue.
11. On the How often did you get income from XXX? screen, select I got it in 2019 then Continue.
12. On the Did the XXX involve an intent to earn money? screen, select No, it didn’t involve an intent to earn money then Continue.

[Opus 17]

---

@smarcy18 wrote:

I am a teacher and I attended a workshop where I was paid a stipend.  I was sent a 1099-MISC and Turbo Tax has be filling out a schedule C; this just does not seem correct?  Any ideas?

---

The payor is treating this as "non-employee compensation."  That is to say, you are being compensated for work you performed or a service you provided, but are not an employee of the paying organization.  This is in contrast to "unearned" income where you might be paid for winning a contest.

Generally, if you have non-employee compensation, you are treated as being a self-employed person (independent contractor), at least for purposes of that part of your income.  That requires a schedule C, to report the income, deduct expenses, and pay income tax AND self-employment tax on your net profit.

In Turbotax Online, you can report the income in the Deluxe version but you can't deduct any expenses.  If you upgrade to The Self-Employed version (most expensive) then you can deduct expenses, such as if you traveled to attend the conference and were not already reimbursed. 

If you think this was not compensation for services performed, you can try and report it as "other income" not subject to self-employment tax.  But the IRS will send you a letter because they automatically consider box 7 income to be self-employment income.

To report this as "other income", enter the 1099-MISC and answer all the testing questions "no".  (Not like your regular job, no intention to earn a profit, not part of an ongoing trade or business, etc.)

[Teachdog3500]

I am a National Union Rep for a union. My primary job is with the government and I get my full salary there. I am given $650 per month from the Union for my expenses and as a stipend. When I ry to enter this information, TT is asking questions I have never seen before.

1)Schedule C: Accounting Method must be entered? Cash, Accrual, or Other
2)Did you materially participate in the operation of this business in 2019? If no, see instructions for limit of loses????
3)Did you make any payments during 2019 that would require you to file a 1099?
Is this activity a qualified trade or business under section 199A?
4) Principle Business Code?

Any advise would be appreciated....

Thank you

[JohnW222]

@Teachdog3500

Here are some quick thoughts, but please see the Instructions for Schedule C for more information. 

1)Schedule C: Accounting Method must be entered? Cash, Accrual, or Other: 

Many small businesses without inventories use the cash method, since it's fairly straightforward.  The fact that you receive income via direct deposit isn't really relevant to which method you're using -- just picture it as normal payment by check or cash.

The choice between cash versus accrual accounting is a business decision, so that's not really something that we're allowed to advise on.  However, please see the TurboTax FAQs below for additional information.

What is the Cash Method of Accounting?

What is the Accrual Method of Accounting?

Unless you are a small business taxpayer, you must use an accrual method for sales and purchases of inventory items.

2)Did you materially participate in the operation of this business in 2019? If no, see instructions for limit of loses????  Please see the paragraph beginning For purposes of the passive activity rules to the right of Line G in the Instructions for Schedule C, which you might want to look at.  This will help you make a determination.

3)Did you make any payments during 2019 that would require you to file a 1099?  You probably didn't, but see Line I in the instructions, linked above.

Is this activity a qualified trade or business under section 199A?  You'll need to determine this.  Please see the TurboTax Help article What is the Qualified Business Income (QBI) deduction? for guidance.

4) Principle Business Code?  Probably 813000, Religious, grantmaking, civic, professional, & similar organizations.  See Principal Business or Professional Activity Codes in the Schedule C link above.