Box 3 1099-MISC Tax?
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DrKiefer
New Member

Box 3 1099-MISC Tax?

Hello,

So I earned 1677 dollars from helping my neighbor and they gave me a 1099-MISC with the amount written in box 3 as other income. Am I subject to taxes for these earnings? This is also my first time filing a 1099, so excuse me for any mistakes. 

 

Thanks,

DrKiefer

3 Replies
Opus 17
Level 15

Box 3 1099-MISC Tax?

What exactly did you do, and who were you working for? It would be very unusual for a neighbor to issue a 1099 form unless they were also a small business.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
DrKiefer
New Member

Box 3 1099-MISC Tax?

@Opus 17 They are landlords and I was helping file paper work

Opus 17
Level 15

Box 3 1099-MISC Tax?

If you perform the service in return for compensation, then you are considered self-employed. The gross payment from the landlord should’ve been reported in box 7, and you would need to file a schedule C as an independent contractor or self-employed person.  You would a regular income tax +15% self-employment tax on your net profit after deducting ordinary and necessary business expenses.

 

There is a kind of semi-official exception to the self-employment rule.  You are normally considered self-employed if you are “engaged in an ongoing trade or business.” If you help somebody one time, then you aren’t necessarily self-employed, provided that you don’t routinely do this kind of business. If you start doing it more than once, then it will be considered ongoing and the IRS will expect you to treat it as self-employment income.

 

as long as this is a one time helping out a friend situation, and not the beginning of an ongoing trade or business on your part, then this would be reported as “other income.“ It is taxable, but it is not subject to self-employment tax. When you enter the 1099 – MISC form with income in box 3, you’ll be asked a series of questions that goes something like: Did you do this work for profit? Do you plan to do this work again in the future? Is this similar to your regular job?  Answer all of those questions as no. TurboTax should put the gross income from the 1099 under the “other income” section and not charge you self-employment tax or require you to fill out a schedule C for a business.

On the other hand, if you are an accountant or an attorney or someone who does this sort of paperwork for a living, and your landlords asked you because of your expertise, then this really should be self-employment income even if this is the only time you intend to work as a freelancer.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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