1099-Nec

Forum|Forum|4 years ago
March 17, 2022
3 replies
11 views

My daughter received a 1099-nec. She does work for a self employed woman.

When I enter in the information from the 1099-nec, I get promoted to complete a Schedule C. It is not my daughter’s business. She just works there. It seems that schedule c would be for the owner of the business.

Anonymous_

Level 15

Your daughter may need to report the income on Schedule C.

The owner of the business has paid your daughter as an independent contractor. Whether she is truly an employee or not, the IRS presumes that 1099-NEC income is self-employment income that is subject to self-employment income computed on Schedule SE as well as income tax computed on IRS Form 1040.

This TurboTax Help states:

Independent contractors are not employees, so if this is your classification, your company doesn't pay for benefits or withhold taxes from your income. Your employer will report your income to you and to the IRS on a Form 1099-NEC, and you're required to report it on your tax return.

JohnW152

Level 15

Your daughter doesn’t necessarily need to be a “business owner,” in the way you’re thinking of it, to be required to file a Schedule C.

She just needs to have net self-employment income of $400 or more.

She received Form 1099-NEC because she earned non-employee compensation while working for this person. That’s considered self-employment income, and would need to be reported on a Schedule C.

If your daughter is your dependent, and her self-employment net earnings were less than $400, she may not need to file a return. Please see the TurboTax Help article Do I need to file a federal return this year? to see if she needs to file a return.

And see the TurboTax articles How to File Taxes with IRS Form 1099-NEC - TurboTax Tax Tips & Videos and What Is a Schedule C IRS form? - TurboTax Tax Tips & Videos for more information on self-employment income.

Opus 17

Level 15

Your daughter is being treated an independent contractor or subcontractor, that's also considered self-employed and goes on schedule C.

If your daughter thinks she is misclassified and should be a regular employee, she can file an extra form and pay taxes as an employee. This will start an investigation of the employer, and the specifics of your daughter's employment (hours, control, supervision, etc.) Refer to the links given by the other experts. If your daughter is determined to be a subcontractor, she will owe the rest of the self-employment tax. If she is determined to be an employee, she may be entitled to back wages and some taxes. Either way, the investigation will likely upset the employer and the position will probably end.

Issues of employee or contractor are also handled at the state level, since the state may have many rules for employees that the employer should be following but is not, and that can result in state fines as well as federal penalties.