I'm trying to help my 20 year old daughter complete her taxes. Her employer sent her a 1099-NEC for last year as her earnings. I've entered all of the info into TurboTax desktop; but when it's time to review, it says to review items from Schedule C (as if it was my daughter's business). It will not let me go past these entries and I don't have any information for them (as, again, it isn't my daughter's business). What am I missing?
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If her employer sent her a 1099-NEC then they are classifying her as a sub contractor or independent contractor which is the same as being self-employed. If she is an independent contractor then her income would go on a Schedule C and she could also claim her expenses incurred for the job.
If the employer misclassified her, then you will need to contact them to get this corrected. They should have taken out Social Security and Medicare taxes, as well as paying their half of her SS and Medicare taxes. If they misclassified her and refuse to fix it, either she will be responsible for Self-employment taxes or you will need to file form SS-8 and 8919 to pay the FICA taxes she was supposed to pay and to let the IRS decide if she is an employee or independent contractor. These forms have to be printed and mailed. They cannot be e-filed, but TurboTax will take you through filling them out. This will delay the processing of her return as mailed returns do take more time to process.
Basically, it is an employee/employer relationship if the employer controls the who, what, when, where and how. If they set her schedule, provide her with the tools to do her job, tell her how to do her job, and provide any type of benefits, she is an employee and they should fix this. If she controls a good portion of the who, when and how, then she is an independent contractor and would need to continue the path you are on in TurboTax filling out schedule C.
1099-NEC is for Non-Employee Compensation.
An associated Schedule C with that 1099-NEC allows the taxpayer to deduct their expenses associated with that activity (e.g. car expenses). The "Business Address" on that Schedule C has nothing to do with the business that issued the 1099-NEC. It can be the taxpayer's home address. For example, if you receive 1099-NEC for "Phone Answering Services" from your home, you put your home address as the "Business Address".
Hope that is helpful.
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