1099 NEC but NOT self employed - state of Iowa retention bonus for daycare employees and teachers

[bluedeacon]

 We're having trouble getting our 1099 NEC loaded which should probably be a -misc from the state of Iowa Human Service. It's for a state paid retention bonus for teachers and daycare employees who have been continuously employed for at least six months and not for self employment. According to the IRS this should be put on line 8i under income. However, no matter how I load it Turbotax tries to treat it as self employment and make me fill out forms for a new business which it is not, and fill out for self employment, which it also is not. If it goes as self employment it is taxed at a higher rate, and they also take out FICA and other such things - and then we have issues with the IRS later wanting to know about our non existent business. Been there already. Last year I was directed to load it as a 1099 - misc with an attached explanation to the IRS. Being as there are thousands of teachers and daycare receiving this bonus and the IRS has a place for it on the 1040 for non self employed 1099 NEC's why does turbotax not have programming to cover this as one of the uncommon options?

[DMarkM1]

Forms 1099 are informational returns filed by the payers.  The payees just need to report the income on their tax returns in such a way that the IRS can easily reconcile your return with the 1099s they received.  With that in mind you are not filing the 1099-NEC just reporting the amounts.  The labels in TurboTax are a guide to help taxpayers enter the income more easily and put it where the IRS expects to find the amount.  

The recipient instructions for the form 1099-NEC state for box 1 income that is not self-employment but something sporadic enter it on line 8 of Schedule 1.  There are lines 8a through 8z which are totaled and taken to the form 1040 as one amount.

To do that you would not enter your form as a 1099-NEC.  Enter the amount as it probably should have been reported, as a 1099-Misc.  You have two good options.

1.  In the "Other Common Income" dropdown enter the amount and label it as IA rention 1099-NEC and select "Prize/Award" as the category.  That will put the amount on line 8i.

2.  In the "Less Common Income" dropdown use the "Miscellaneus Income" topic and label as IA retention 1099-NEC.  That will put it on line 8z.

Be sure to delete any 1099-NEC entries you made for the forms as well as any businesses you may have created for it.