1099 NEC for commissions as employee

[Padfoot55]

Received a 1099 NEC for commissions as full time employee.  Was told this is not correct.  Can employer provide a 1099 misc for the commissions received?  Or does it need to be on a W-2.

[rjs]

All payments from an employer to an employee are supposed to be included in the wages on the employee's W-2.

There is a way for you to report the commissions properly on your tax return, even though your employer incorrectly reported them on a 1099-NEC. You enter the income as additional wages that were not reported on a W-2. You will have to pay the Social Security and Medicare taxes that the employer should have withheld from the commissions. This will be the same amount that would have been withheld if your employer had handled it correctly and included the commissions in your W-2.

The payments will be included in the total wages on Form 1040 line 1. On the dotted line to the left of the amount on line 1 there will be a notation "F8919" and the amount. Form 8919 will be included in your return, with reason code H in column (c). Form 8919 will calculate the Social Security and Medicare taxes. The total of these taxes will appear on Schedule 2 line 6 and will be included in your total tax liability.

EDIT: Use the much simpler method in my additional reply below, instead of the following steps.

Do not enter the 1099-NEC in TurboTax. Follow these steps to enter the commissions. The first few steps might vary a bit in TurboTax Online, depending on what you have already done.

• Click Federal or Federal Taxes.
• Click Wages & Income.
• Click "I'll choose what I work on" or "Jump to a full list."
• On the screen "Your 2021 Income Summary," scroll all the way down to the last section "Less Common Income." Click the Start button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."
• On the next screen click the Start button for "Other income not already reported on a Form W-2 or Form 1099."
• The next screen asks "Did you receive any other wages?" Select Yes and click Continue.
• The next two screens ask about household employee wages and sick or disability pay. Click Continue on these two screens without entering anything.
• The next screen asks "Did you earn any other wages?" Select Yes and click Continue.
• The next screen asks the source of the other earned income. Select "Employee compensation that was not reported on a W-2." Click Continue. Ignore the note that says not to enter payments for which you will receive a 1099.
• On the next screen, "Employee Compensation Not Reported on a W-2," click Continue.
• If you are filing a joint return, you will get a screen asking which one of you the income is for. Select your name and click Continue.
• On the next screen, "Report Your Wage Income," enter the employer's name and EIN from your W-2. For Total Wages Received, enter the amount of the commissions. Check the box that says "I received a Form 1099-MISC for this income." For the Reason Code select "H - I received a Form W-2 and a separate Form 1099-MISC and/or 1099-NEC and the income should have been reported on Form W-2." Click Continue.
• Read the next screen, "Report as Wages," and click Done.

[rjs · Accepted solution]

Here's a much simpler way to enter the commissions in TurboTax, with the same end result. You start off by entering the 1099-NEC.

Type 1099-nec in the search box, then click the link that says "Jump to 1099-nec." After you enter the information from the 1099-NEC you will come to a screen that asks "Does one of these uncommon situations apply?" Select "My employer reported this extra money on a 1099-NEC but it should have been reported on a W-2." Then click Continue. On the next screen select "I received Form W-2 and this Form 1099-NEC, but all the income reported on this Form 1099-NEC should have been included on my Form W-2."