No. You are not exempt from taxes. The 1099-NEC income, if from self-employment is subject to Self-Employment taxes and that would be the reason your went from a refund to owing. The SE tax is 15.3% of your earnings.
If this was not income from Self-Employment (performing services for pay even if you do not have an official business), then after you enter the 1099-NEC, you can select that this was hobby or sporadic activity. This will remove the self-employment taxes, but will keep the income taxed as ordinary income.
Wages/Self-Employment Income In most situations, members of federally recognized tribes who work for an employer or who are self-employed are subject to federal income taxes on wages and self-employment income earned. The amount received from an employer (Form W-2 wages) is reported on the “wages” line of the individual’s tax return, while self-employment income is reported on Schedule C, Profit or Loss From Business. They are subject to both income and FICA tax (including self employment tax). Generally, your employer must: Withhold the employee’s share of taxes under the Federal Insurance Contributions Act (FICA), Withhold federal income tax from employees’ wages, and Pay federal employment taxes on wages paid to employees. Note: IRC Section 7873 provides an exemption for income earned from the exercise of treaty based fishing rights. Income Tax Guide for Native American
Individuals and Sole Proprietors
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