1099-Nec

[paolasilvestre]

Hello,

I got reimbursed from another employer for $228 for event supplies and I just received a 1099-NEC, I believe this to be incorrect. Am I wrong?  What can I do?

[RobertB4444]

It's not wrong.  They paid you $228 and the form shows it.  However, that wasn't income to you so you don't owe taxes on it.

The easiest way to handle it is to enter the 1099-NEC as income and then enter a matching expense for the supplies that you bought.  That creates a schedule C for your tax return that reports the income to the IRS but also shows that you don't owe taxes on it.

The downside to that is it requires you to buy a higher version of TurboTax which you don't have to do unless you have other self-employment income (which, if you do, you can skip the rest of this).  In order to avoid that enter the 1099-NEC just as you have received it for $228.  On the third screen of the 1099-NEC entry form tick the box that says "This is not money earned as an employee or a self-employed individual.  It is from a sporadic activity or a hobby (This is not common)."

Now you have the money entered on your tax return and the IRS will see it and not wonder where it is.  But it is still being taxed.

To fix that you go all the way to the bottom of the 'Wages and Income' section to 'Less Common Income' and click on the bottom box that says 'Miscellaneous income'.  On the next screen, all the way at the bottom, it says 'Other Reportable Income'.  Click that.

The description is "Reimbursement for Supplies" and the income amount is the negative of the amount on your 1099-NEC (-228).  That removes the taxable amount from your return and you're all set.

@paolasilvestre 

[paolasilvestre]

Thank you so much.  I was not expecting this and I already filed my taxes, so do I file the amendment right now?  Feels like so much work for such a low amount, but I understand is necessary

[taxlady28]

You will need to amend but not to buy higher version of TurboTax.  Enter it as Other Common Income.

[ThomasM125]

Since it is a small amount of money and you have already filed your return you could not report it but it is possible the IRS will send you a bill for the taxes due, which may be in the $50 range. If so, you will have an opportunity to protest the bill by sending in a response as to what happened and that may settle the matter. It wouldn't be correct to treat the income as self-employment income since you aren't self-employed, so the supplies you purchased wouldn't be deductible as employee business expenses.