#1099nec

[pcee-mcdd-mdak-vz2u]

Why is 1099nec income considered 'unearned' and throws my 22 year old granddaughter into an #8615

[macuser_22]

A 1099-NEC on a schedule C is not unearned income.   What other income is there  on the 1040 lines 2-5?  Or 1099-MISC?

[LenaH]

A 1099-NEC can be classified as a Schedule C or Other Income. Typically, kiddie tax will be applied to Other Income, because it could be unearned or earned income. It would be best to allocate his 1099-NEC to a Schedule C to prevent kiddie tax.

For tax purposes, self-employment income includes any part-time businesses or "side work" performed in which you are in business for yourself, rather than another person. You are also considered self-employed if you engage in business-like activities where you intend to make a profit.

To input your 1099-NEC, please follow the steps below: 

1. Open your return.
2. Search for 1099-NEC with the magnifying glass tool at the top of the page.
3. Click on the Jump to 1099-NEC link at the top of the search results. 
4. Click Edit next to your 1099-NEC.
5. On the page titled Guess what? You can deduct expenses for the example work choose Yes, I have expenses to deduct.
6. On the page titled Self-employed 1099-NEC Income select the Schedule C you are inputting this income for. If this is a new Schedule C for this year, you can add a new business on this screen.

To confirm your 1099-NEC was linked to your Schedule C, please follow the instructions below:

1. Open your return.
2. Search for Sch C with the magnifying glass tool at the top of the page.
3. Click on the Jump to Sch C link at the top of the search results. 
4. On the page titled Your 2020 self-employed work summary, you should see your 1099-NEC listed with the corresponding amount. 
5. Click review next to the income from your 1099-NEC. 
6. Follow the on-screen instructions on the following pages. 

@pcee-mcdd-mdak-vz2u

[Hal_Al]

The only way 1099-NEC income would be entered as unearned income is if you deliberately answered the follow up interview questions in TurboTax in such a way to enter it on the IRS forms as unearned income (typically line 8 of schedule 1).

To answer your questions we need to know who paid her and why. What did she do to get this money.  If she worked, it's self employment (earned) income.  Usually the only exceptions ("one time gig") make it unearned income.