1099-NEC Former Employer

[jswhitaker2013]

I received a 1099-NEC from a former employer for commissions due after termination. I was employed with another company full time while receiving this compensation. I'm not self employed and don't have a business yet TurboTax is still making me file a Schedule C and name my business for this income. I also get hit with self-employment taxes although I'm not self-employed. How do I fix this situation?

[DavidD66]

The commission payment you received is earned income.  Since you are no longer employed by the company that paid you, they reported it on Form 1099-NEC.  Unless you can get your former employer to issue a corrected 1099-NEC with a zero amount paid and issue you a W-2, you will have to report it as self-employment income.  If you had been paid as an employee and the payment reported on a W-2, you would have had Social Security and Medicare tax withheld.  Self-Employment tax is basically both the employee and the employer's part of social security and Medicare.  If you have any expenses you can allocate to that income, you can deduct them on Schedule C.  

[jswhitaker2013]

How can I get a W-2 if I am not employed by them. I was employed with a different company. This was not a business endeavor but was commissions due from sales when I was employed by them.

[Opus 17]

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@jswhitaker2013 wrote:

How can I get a W-2 if I am not employed by them. I was employed with a different company. This was not a business endeavor but was commissions due from sales when I was employed by them.

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Even though you were not an "active" employee, the commission should be reported on a W-2 like it would be if you were still an active employee, and the employer should withhold the 7.65% social security and medicare tax and pay the matching amount themselves.

If they will not issue a corrected W-2 and take care of the SS and medicare tax, there is a procedure you can use.  But before using that procedure, you should ask the company for a W-2 so that you have proof of their refusal (assuming they refuse). 

[ThomasM125 · Accepted solution]

If you were employed by them then the income should have been reported on a W-2 form. If the employer won't correct that, you can indicate that the income should have been reported on a Form W-2 and complete a Form SS-8 separate from your tax return and mail it to the IRS. You would have to do the Form SS-8 before you file your tax return though. You will see options for this after you enter your Form 1099-NEC in TurboTax: