1099-NEC for a "one off" "freelance job"

[Varsuuk]

Hi there, I unfortunately am rushed to finish my taxes since I have to fly to Florida Monday because my dad is in grave condition in hospital. So I may not be reading things right or thinking too straight.

Background:

My wife is working on her Masters. Due to life issues, she hasn't finished her paper. But a former Economics teacher reached out to her last year and offered her the chance to work on editing/writing on a textbook's classroom presentation slides and teaching guild. I forgot what she was paid an hour, but at the end, between September and end of the year, she earned 3,900.  She continued on the single project until it was completed at the end of February (and was given a 2K? bonus if I recall for completion on time.

She received a 100-NEC from a company in NJ. We are Westchester, NY residents. The work she was doing was for a HS program in a whole bunch of Eastern European/Baltic/former-Bloc countries, so I can count my lucky stars the employer was here in the US 🙂

She is a homemaker and does not do this for a living. Once she gets her Masters (we hope) she will look at entering the workforce. She doesn't have "a business" and is not normally "self-employed".

I use TurboTax Deluxe and the only part I wasn't sure was the:

"Does one of these uncommon situations apply?

...

This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common).

..."

As far as I know, the 1099-NEC means she has to pay the Federal/NYS taxes after the fact (no withholding was done) and, if I understand: Social Security tax normallly paid by employee, Social Security tax normally paid b the employer,  and Medicare tax (no idea if this also has 2 parts)

Does any of that change if this was a "one off" thing and not a business or job she is holding? I mean, it WAS a "job" cos they reached out and offered her money to do the editing. But I wanted to be clear in case the "hobby" thing was an option that meant we wouldn't need to pay the "employer" parts of the SSI/Medicare that self-employed folks do. But I know nothing so it is probaby a dumb question...

[KrisD15 · Accepted solution]

From your description, the IRS would consider this as Self-Employment income.

You would have a difficult time arguing that this was a hobby.

She will need to include Schedule C to report that income.

Yes, besides INCOME tax, she will also pay FICA (social security) tax on the profit. Yes, she pays both halves of the FICA tax, but does get a credit for the business half she pays. The Software calculates all that. 

She can deduct expenses, such as supplies and internet service. Claim the portion of internet expenses relating to her business use. 

The business will continue if she was paid in 2023 as well as 2022. 

The income will be reported on your NY state return. 

Best wishes for your father. 

[Varsuuk]

Thank you for the answer (and wishes) - I expected so, I was just wondering what "not an employee and not self-employed" might have been applicable because this is not a "business" intent for her and she isn't going to be doing it again (but it did start in Sept and end in Feb, so it spanned 2 tax years).

I was hoping for a simpler thing 😉  - but I will push on then, appreciate it.

(pays both halves then gets a credit for one half... weird - I'm sure it is for a reason somewhere - I never pretended to understand crap, just how to fill in squares in this app 🙂  Hell, except for years I sold ESPP or RSUs, it was so easy I prob could have done it on paper but I've been TTing for 25+ years. Last year we bought a house, but only for the last month, Dec 14th. This was the first year I paid a (big) mortage all year long. Ironically last year and this year were the only 2 years I didn't get a large total refund in a LONG time (I don't withhold as much as I can - figure let gov earn interest, I sure as heck don't)

And this year, I even owe (~1K Federal before I added wife's 1099, 2.2K after adding her income & pre business deductions - at least NYS gives me back more than I owe.)  Cos of the "Tax Cut Cut" 😜 plan I lost the full interest deduction and never got to use the home office deductions. I am full work from home software engineer and bought a house with full office for me to use just for work, a big one too - HER home office is teeny by comparison :(

But I am not self-employed, I am a full-time employee so I get nada.  I wish I'd been able to buy the house in 2011 instead of 2021.