1099-NEC using Turbotax Deluxe

[DesertFlier]

Hello.  Just a general question/observation.  I'm doing my taxes for my 17 year old who worked for two companies.  (I'm using Turbotax Deluxe because that's what I used for doing my personal taxes.)  Company A issued a W2 and company B issued a 1099-NEC.  Regarding the 1099-NEC, my child works as a singer/dancer at a company that does Disney themed birthday parties.  From what I understand, she is responsible for paying herself employment tax (15.3%).  In general, she was paid approximately $1500 and had $150 in deductions (makeup, curling irons, etc).  She does not drive nor own a car so I did not include any automotive deductions (I do all the driving for her).   Am I correct in assuming there is no easy method for filing the 1099-NEC?  Turbotax seems to lead me down a rabbit hole of countless forms with questions referring to her "business" (she has none), wether or not it is a "Qualified Business" (I have no idea), and wether she materially participated in her business (again, not sure how to answer that).  This all seems so ridiculous for a teenager who has such a simple job.  Is there no way around all of this paperwork?  No "1099-EZ" or some such thing?  Anyway, I'd love to hear any feedback.  So quick summary: $1500 earned.  Issued 1099-NEC.  Paid no state or federal taxes during the year and has $150 in business related deductions.

Thank you!

[VolvoGirl]

Are you using the Online version or the Desktop installed program?   If you are using Online you will have to upgrade to the Self Employed version to enter it.

Sorry, Yes you are the owner of your own self employment business.  You are in business for yourself.  Use your own info.  The people or company that pays you is your customer or client.  You are considered to have your own business for it.  YOU are the business.

You need to fill out schedule C for self employment business income and pay self employment tax in addition to regular income tax on it.  The SE tax is to pay Social Security and Medicare tax that wasn't taken out like on a W2.

You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version.

How to enter income from Self Employment

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  

The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 Schedule 2 line 4 which goes to 1040 line 15.  The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf

[VolvoGirl]

I missed posting this.   Here's some more info...

Here is Schedule C to see what you are filling out

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

You are considered self employed and have to fill out a schedule C for business income.   You use your own name, address and ssn or business name and EIN if you have one.   You should say you use the Cash Accounting Method and all income is At Risk.   Yes it is a qualified business.

She will also need to enter a business code.  Schedule C line B Business Code is a 6 digit number for your activity.  Here are the IRS instructions for Schedule C.  Business codes start on page 18.  If you can't find a code that applies, you can enter 999999.

http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

[Desertflyer]

Thank you so much!  It all makes much more sense now.  I'm still a little tripped up on two questions. 

1) Is it a qualified business?

2) Did he/she materially contribute to the business?

I haven't had time to check out all your links yet so you may have provided the answers for those questions. But that's all I have left now.  Well, that and making estimates tax payments for this year but I think that's pretty straight forward.  Your explanation was excellent!

[Desertflyer]

Thanks again. So yes on qualified business.  That was one of my questions.  I'll review the return with the info you've provided. I think I've filled it out correctly based on what I'm reading here. 

[KevinTheGoalie]

Piggy-backing on this question...  My child 14-yo received a 1099-NEC for $630 for refereeing youth hockey.  He has no other earned income.  He spent $300 in 2021 buying refereeing equipment.  Sounds like he need to file?  Can he deduct the equipment expense?  Is it possible to transfer the $630 to other income since he is not in the business of refereeing?  I am trying to use the TurboTax free version to file.  Thanks!

[VolvoGirl]

Sorry he has to file and report it as self employment income on Schedule C.  If he wants to deduct the expenses he will need to upgrade to the Self Employed version.

How to enter income from Self Employment

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

Be sure on his return he checks the box that says he can be claimed on someone else's return under My Info.

[JohnB5677]

He does not have to file because his standard deduction will wipe out that income.  

He can not deduct the purchase of the equipment unless he files as self-employed.

The only reason for him to file would be if he had income tax withheld.

This is how he would enter it:

• Wages & Income
• Other Common Income
• Select Income from a 1099-NEC
• Enter payer's name
• EIN Number
• Amount you received
• Describe the reason for this 1099-NEC = State what it was for
• Does one of these uncommon situations apply?

Click This is not money earned as an employee or self-employed individual,