1099-NEC for taxes not from main employer

[ppetersny]

my daughter worked for an employment agency and received a W2 from them.  She had been placed in a job at a campground.  The campground did not employ her and did not send a W2 as you would expect.  But they did send her a 1099-NEC for tips that they collected for her while she was working there.  How do I report this in Turbo Tax 

[ppetersny]

to clarify, when I say "as you would expect" I mean we didn't expect to receive a W2 from them b/c they did not pay her salary

[RobertB4444]

In your daughter's federal return scroll down in the wages and income section to "1099-MISC and Other Common Income" and click start next to "1099-NEC".  

Say yes and then select "Self-employment income" as the type of income.  Then enter the information from the 1099-NEC.

On the next page it will ask if any of the income on the 1099 is tip income and you will enter the full amount from the 1099-NEC.

That will enter and remove the income from her tax return and you'll be all good.  The tip amount will be reported an 1040 schedule 1-A.

[ppetersny]

Thank you.  Now it is having an issue with the 1099-NEC box 6  with "State Number"   I filled in the State as "NY" and the 1099-NEC does not have a state number, but Turbo Tax keeps flagging "needs info" for the state number

[DianeW777]

No problem at all. Use the federal employer identification number with no dashes (or letters-not common). This will allow your return to move forward and you can have every confidence it's all right to use that.  The IRS keeps no record of state information in your tax files.

@ppetersny 

[ppetersny]

Thank you!

[ppetersny]

I am still confused about something, before adding the 1099-NEC for the tips, TT was showing a Fed refund of 997 and state refund of 324.  After adding the 1099-NEC info (2968.41) it is now showing Fed refund of 578 and stat refund of 206.  If there is no tax on tips, that doesn't sound right that the refund would be lowered.   Not sure if this is related, but at one point it said "We weren't able to deduct all of your tips because the deduction can't be more than your self-employment income"  It listed the deduction for tips as 2758.00

[ppetersny]

Does anyone have any thoughts on this?

[RobertB4444]

Is there a deduction for tips entered anywhere else?  Also, go back through where you entered the 1099 and make certain that there isn't a typo.  The system thinks that there is a deduction for tips that is BIGGER than the amount on the 1099 so it is having trouble with it.  The deduction that you entered should have been exactly equal to the amount on the 1099.  Make certain that they match and that there isn't any tip deduction entered anywhere else.

[ppetersny]

thank you.  There were no tips reported anywhere else other than the 1099-NEC.   I noticed that the deduction that it says I am getting for tips (2758.00) is 210 less that the amount of tips (2968)  which matches the 210 self-employment tax deduction it says I'm getting.   And it's also charging a self-employment tax of 419 on the tips reported on the 1099-NEC.    Perhaps there's a way to cause the tips on the 1099-NEC to not be treated like self-employment (?)

Here is the summary if this helps explain what I am seeing....  

Your filing status is Single. This affects your tax rates and which deductions you can take.

Your total income was $18,396, including:

• Total wage income: $14,846
• Taxable interest income: $582
• Business income: $2,968

You took the Standard Deduction of $15,750. You also had a self-employment tax deduction of $210 and a qualified tips deduction of $2,758.

After applying your deductions, your taxable income was $0. Your total tax before credits was $0, but you owed $419 in self-employment tax.

You've already paid $997 through W-2 withholdings. After subtracting your self-employment tax from your payments, your refund is $578. This means you paid more in taxes during the year than you owed, so you get the extra money back.

 thank you.

[DianeW777]

All the calculations are correct after entering the 1099-NEC. 

1. Self employment tax which can be better explained below.
   • Based on the business income the self employment tax is correct. ($2968 x .9235 x .153 = $419)
2. The self employment tax deduction if half of your self employment tax and is allowed to reduce your overall personal taxable income.
3. You should see the tips on Schedule 1-A on your return. Check to see if you see them on Line 5 and Line 13. 

An exception could be your selection for type of industry the work was for, as well as the answer on the page 'Let's check for uncommon situations (should be no). Although it is a deduction from your income is is not a deduction from your self employment income before the calculation of self employment tax.

Review your Form 1040:

From the left rail menu in TurboTax Online, select Tax Tools (You may have to scroll down on the left rail menu.)

1. Select Tax Tools
2. On the drop-down select Tools
3. On the pop-up menu titled “Tools Center”, select View Tax Summary 
4. On the left sidebar, select Preview my 1040 

For TurboTax Desktop, change to 'Forms' and review the forms 

@ppetersny