1099NEC

[TJZannetti]

I have a client who is a retired principal from a private school  and as part of his benefits of retirement they pay for his grandchildren tuition at that school. He received a 1099 NEC  for the tuition amount $70,800.  While he was working they included it on his W-2 and withheld federal state FICA , and Medicare. My question is I understand that it is taxable, but is it subject to SE Tax?

[KrisD15]

Yes, if they reported it on Form 1099-NEC (Non-Employee Compensation) they are treating it as earned income. 

He will need to report the 1099-NEC on Schedule C and pay Self-Employment tax. 

This is the same (almost) as when it was added to his W-2 income. 

Using Schedule C means he pays both halves of the FICA tax, but he also gets half as a credit. 

Because he is not in a trade or business to receive this income, he should answer "No" to being eligible for the 199-A Qualified Business Deduction. I also advise he not claim any expenses on the schedule C and only use it as a vehicle to report the income and pay the taxes.