I did side job in landscaping, so I understand why I am getting a 1099 NEC from the owner . Its prompting me to then fill out a Schedule C, but its is asking "in depth" questions that I have no knowledge of. For example:
Accounting Method, Method to value closing inventory, Material participated(?), All investments AT RISK, Simplified Calculation of Amount of Risk. This is confusing for the minimal of $2800 I earned . Any guidance is appreciated. I haven't spent a dime, not my business, just my labor. Thanks
Income reported in box 1 of form 1099-NEC is self-employed income. You are considered as self-employed and in IRS terms, are operating a business doing what you do to earn the income reported on the form 1099-NEC.
You do not own a business in the common meaning of the word. So in TurboTax answer that you use the cash method, that you do not have an EIN, that all investment is at risk. You use your own name as the business name and your personal address as the business address. You can use 999999 as your business code.
You enter your form 1099-NEC in TurboTax and TurboTax will populate a Schedule C after you enter all your information. You can deduct any expenses you paid related to this activity (such as supplies, car expenses, etc.)
Self-employed income is subject to income tax AND self-employment tax (calculated at 15.3% on 92.35% of net self-employed income).
You’ll need to use TurboTax Deluxe (or TurboTax Online Premium if you have expenses to deduct), or any version of TurboTax CD/Download.
You can read this TurboTax article for more information.
Since I just did some landscaping, how would I answer:
Method used to value closing inventory? (I own nothing for the company)
Materially Participated? I did less than 500 hours. Mayne 100-150
All Investment is At Risk?
Thank you
Normally, as you do not have inventory, you can say that you have no inventory to report. If TurboTax asks the inventory value method answer Cost.
Answer that you materially participate, as you actually did the work.
All investment is at risk as nobody would cover you if you had losses in this business.
Thanks for your help. Would it "hurt" or better to answer as Cost? As opposed to Other and "none"
It does ask:
You should select the cost method. It's the most common way businesses value their inventory, using the amount that you paid for the goods as your cost. The other two methods are the lower cost of the market method, and the retail method. For more information refer to IRS Publication 538.