I have a 1099-MISC from an employer. I do NOT own a business. Why is TurboTax making me fill out Schedule C?

[ScottMarshall]

I had this exact same type of income last year.  It was listed under the 1099-MISC section. This year, it's trying to force me to write it up as a Schedule C Sole Proprietorship and asking a bunch of dumb questions.

It's regular income and I want to report is as regular income just like last year.  Why all these unnecessary hoops?

[DoninGA]

Well, for one thing if you are an employee there is no reason for the employer to issue you a Form 1099-MISC or a Form 1099-NEC.

Look at the Form 1099-MISC - Is your payment reported in box 3?  If so, see what the IRS considers income in box 3 -

Box 3. Generally, report this amount on the “Other income” line of Schedule 1 (Form 1040) and identify the payment. The amount shown may be payments received as the beneficiary of a deceased employee, prizes, awards, taxable damages, Indian gaming profits, or other taxable income. See Pub. 525. If it is trade or business income, report this amount on Schedule C or F (Form 1040).

To report the Form 1099-MISC -

Click on Federal

Click on Wages & Income

Scroll down to Other Common Income

On Form 1099-MISC, click the start button

Enter your Form 1099-MISC and continue

Enter the reason why you received the form and continue

Click on None of these apply and continue

Click on No, it did not involve work from your main job

Click on the years you got this form

Click on It is not an intent to earn money

[ThomasM125]

The questions in TurboTax regarding Form 1099-MISC are designed to insure the income on it is properly handled on your tax return. You will need to indicate that the income is not associated with your main job, is not recuring year to year and the activity was not engaged in to earn a profit in order for the income to not be treated as self-employment income. If any of those three conditions are not met, then it is likely the IRS will treat the income as self-employment income. Also, those questions will not appear on your tax return, they are just asked to help determine the correct way to report the income on your tax return.

[Opus 17]

The question is why did you receive income that was separately reported on a 1099.

Generally speaking, everything that your employer provides as compensation for services given should be wages reported on your W-2. If this was a bonus, or something else given in recognition of your service, it should have been reported on your W-2. The proper procedure is to contact the employer first and ask them to issue a corrected W-2 and cancel the 1099. If they refuse to do this, you can report the income using form 8919 with code H. This is for a 1099 that should have been reported as W-2 wages. I believe that in the 1099 interview, there is a box you can check on a page listing special circumstances for, “these were wages from my employer that should’ve been on my W-2.”

The other possibility is that you work in an industry where you receive bonuses directly from the manufacturer of things you sell, rather than from your employer. These are sometimes known as SPIFFs, or performance incentives. For example, you work for an appliance store and you receive regular wage from your employer, and then you receive a bonus check directly from thr manufacturer for their appliances that you sell.  The spiff is not considered compensation for work performed, because you are not working for the payer.  In this case, the spiff is properly reported as 1099-MISC income that is not related to your regular job.

[Opus 17]

Lastly, of course, if you are a contract worker and do not receive a W-2, then you are self-employed, whether you want to be or not.  The important difference is between employees and contractors are described here. 
https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-o...

If you don’t receive a W-2, and you only receive a 1099, then you will need to go through a complicated process to have the IRS determine what kind of worker you really are.

[Dh5120]

I am in the exact same boat, I've been on a call with product supports almost 6hrs and we cannot find a solution with desktop version either. It's forcing me to say I own a business and I do not. I've used it for ten years and have always had this situation it's never required me to do sch c

[DianeW777]

It is because you are answering the questions to indicate it involved work and intent to earn money.  Follow the instructions below to remove it from Schedule C.

This income is not business income, rather miscellaneous as indicated by your Form 1099-MISC. It's your money making money for you and not because of a service you performed.

It's important for you to select 'None of these apply" and then you should also select the following:

'No' on the screen 'Did the '____' involve work that's like your main job?'

'No' on the screen 'Did the '____'  involve an intent to earn money?'

This will report the income without any business activity and it will show up on Form 1040, Line 8 (From Schedule 1, Line 8z).

If necessary you can delete Schedule C using the link below for your TurboTax version.

• If you're using TurboTax Online software and need to delete a form, click here.
• If you're using TurboTax Desktop software and need to delete a form, click here.

NOTE:  Your employer should not be issuing a 1099-MISC and a W-2. It's not how employer/employee payments are handled.  Everything goes on a W-2.

@Dh5120 

[Dh5120]

Thank you, it didn't come from my W2 employer though. I work two side jobs. I had to pay to upgrade to a live agent and he walked me thru it and I had to put my expenses in sch c 

[Opus 17]

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@Dh5120 wrote:

Thank you, it didn't come from my W2 employer though. I work two side jobs. I had to pay to upgrade to a live agent and he walked me thru it and I had to put my expenses in sch c 

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You are responding to an old question and you have not told us your facts.  How you report income if your employer pays you on a W-2 and a 1099 is very different than if you have side jobs or work independently. 

If you work a side job, you must report that as self-employment income on schedule C.  You list your income and expenses, and pay income tax and self-employment on the net profit.  You don't have an employer, you have a client or customers who contract for your services.  While your clients should issue a 1099-NEC if they pay you more than $600, you must report all your income, even if it is on a 1099-MISC and even if it is in cash with no 1099 form.

If you have two side jobs that are essentially the same (like Uber and Instacart, both ride sharing) you can combine the income and expenses on one schedule C.  If your side jobs are different (like ride sharing and house painting) then you need two separate schedule Cs, one for each job, that lists the income and expenses that are particular to each job.