I received a 1099-NEC from a company that paid me a fee to use my data/answers for research while attending counseling. Unsure how to proceed with 1099-NEC form.

[user17713498320]

I am not an employee of the company so I did not receive a W-2.

I am unsure which option to choose from for the "What type of income is on your 1099-NEC?": Self employment income, Farm income, Hobby, Lawsuit settlement, Medicaid waiver payments that qualify as difficulty of care, Income that should've been reported on a W-2.

1099-NEC for research was $500.

[CesarJ]

If this was a true one-time activity and you don't intend to do this type of work on an ongoing basis, it may qualify as "Other Income" instead of self-employment.

To enter other income in TurboTax follow these steps:

1. Open your tax return.
2. Navigate to Federal Taxes.
3. Select Wages & Income.
4. Scroll down to the Less Common Income section.
5. Find Miscellaneous Income and select Start (or Update).
6. Choose the correct category and input your Other Income details.

[user17713498320]

Hello @CesarJ 

While using the TT2025 desktop app, I followed your steps. However, when I scrolled down to the Less Common Income section, I did not see a place for 1099-NEC. I only see a place for 1099-NEC under, 1099-MISC and Other Common Income section. When I entered this information for taxes in 2024, I do not recall being prompted as I am now. My counseling lasted several months and I opted to receive payment for them to use my data/answers during those sessions for research. Should I review TT2024 desktop app to understand how I entered it? Or, is there something that I am missing while using the TT2025 desktop app for inputting 1099-NEC data?

[DianeW777]

No, you are not missing anything. In 2024, the same prompt would have occurred unless the reporting form was not a 1099-NEC. If you received a Form 1099-MISC, depending on how you answered the questions you may not have been prompted. You can review your 2024 return to see how you included it. If you did pay self employment tax you will see Schedule SE in your tax file.

Keep the 1099-NEC in your tax file, do not enter the form itself if you agree with @CesarJ . This form is considered used for self employment or independent contractor and may not be the one that should be used in your situation. 

Note: You can decide if it is hobby or business income.  This IRS link will help you: Business or Hobby?

Key elements:

1. A hobby requires you to report the income you received and under the current tax law, Tax Cuts and Jobs Act (TCJA), no expenses are allowed to be used to reduce the money collected even if you itemize deductions.
2. A business allows you to deduct the costs necessary to obtain the income.  The law explains that 'you must be engaged in the activity to produce a profit'.  The test under IRS tax law is that you must show a profit three out of every five consecutive years to be considered a business.

For Hobby report as indicated above and here:

Other Miscellaneous Income:

1. Go to the Wages and Income  section of TurboTax
2. Scroll to  Less Common Income > Select  Miscellaneous Income, 1099-A, 1099-C
3. Select Hobby Income and Expense > Enter the income

For Self Employment enter the 1099-NEC and use the information below.

If you are using TurboTax Desktop or TurboTax Online you can use the steps below:

1. Search function in the upper right and type Schedule C. Click on the Jump to.. link
2. This will bring you to the screen 'Here's the business info we have so far'. 
3. Select Edit beside your business and then scroll to Business Expenses, Assets, etc. to begin your entry.
   • How do I report self employment income?
   • Where do I enter my self employment business expenses

@user17713498320