My 1099 NEC is not subject to self employment taxes per IRS memo 1402 (c) (1,2). How to I stop Turbo Tax from calculating self employment taxes?
To exempt your 1099-NEC from self-employment tax:
- Type 1099-NEC is Search in the upper right
- Click Jump to 1099-nec
- Say Yes to Did you get a 1099-NEC?
- Select Add a 1099-NEC on Do You Want to Enter Your 1099-NECs Now?
- Enter your information. Continue.
- Fill in why you received the 1099-NEC in Describe the reason for this 1099-NEC. Continue.
- Select None of these apply to me on Does one of these uncommon situations apply?
- Select I don’t have expenses related to this income on Guess what? You can deduct expenses
Selecting expenses will generate self-employment tax.
Internal Revenue Code section 3401(c) indicates that an “officer, employee, or elected official” of government is an employee for income tax withholding purposes. However, in some special cases the law or a Section 218 Agreement may specify otherwise.
The courts generally define "public official” and “public officer” to mean anyone who exercises significant authority pursuant to public laws. This includes any official who administers or enforces public laws whether the public elected the individual or an office appointed them.
Regulations for section 1402, addressing the applicability of self-employment tax, indicate that performance of the functions of a public office does not constitute a trade or business. Therefore, holders of “public office” are not subject to self-employment tax. An exception applies for certain public officials paid solely on a fee basis. All other holders of public office, paid on a salary basis, are excepted from self-employment tax and are presumed to be employees receiving wages.
Refer to Tax Withholding for Government Workers.
Thank you for your help. These instructions work until I go through the final Quick Check which goes back to self employment taxes. It has taken several tries to get through the tax return and learn how not to answer questions. I hope I have answered everything correctly for my situation.
If your 1099-NEC is flowing to Other Income on your tax return, then please make sure to delete your Schedule C and any only self-employment forms (such as Schedule SE).
Please follow the instructions below:
- Search for Schedule C with the magnifying glass tool on the top of the page.
- Select the Jump to Schedule C link in the search results.
- Select No to the question Did you have any self-employment income or expenses?
- Click on Tools.
- Click on Delete a Form.
- Scroll down to your forms and look for forms you need to remove (Schedule C and Schedule SE) and click Delete.
To confirm your 1099-NEC went to Other Income on your 1040.
- Click on Tax Tools on the left hand side.
- Click on Tools.
- Click on View Tax Summary.
- Click on Preview my 1040 on the left hand side.
- Search for Schedule 1 - Additional Income & Adjustments to Income.
- A description of your Other Income and the amount should be listed in Line 8.
I can't seem to get this to work. I've deleted Schedule C but there doesn't seem to be any way to force this income to Schedule 1 - other income. I just keep getting an error saying I am missing information for my 1099-NEC. Turbo tax wants my business name and won't let me leave this blank. It I put anything in there it generates a Schedule C for this income. If I don't do anything besides enter the 1099-NEC info, Turbo tax won't put this income anywhere at all.
Is there any work around?
If your 1099-NEC income is not related to self employment, you can simply enter information under Other Income. Here are the steps:
In TurboTax online,
- Sign into your account, select Pick up where you left off
- To the right upper corner, in the search box, type in "other reportable income" and Enter
- Select Jump to other reportable income
- Next screen, Other Wages Received, select No to continue
- Next screen, scroll down all the way to the bottom, under Other reportable income, select Start
- Next screen, Any Other Taxable Income? select Yes to continue
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