Is schedule C and a business required if a 1099NEC is received?

[mulleryi]

I received 1099NEC because I taught a lecture in another university. I added the amount from 1099NEC as an income and entered "teaching" as the reason for this 1099NEC form. Next Turbotax is asking me to select the business that generated this 1099NEC, and "teaching" was listed as the default option. When I selected "teaching", somewhere in Turbotax also implied that I will later file schedule C. I am very confused. May I ask

1. It seems that because I have received an 1099NEC form, Turbotax thinks I have registered a business. However, I have not registered a business. How shall I make it clear in Turbotax?

2. It seems whatever I entered as the reason for the 1099NEC will be defaulted as the name of a business, and I have to specify a name of the business. How shall I honestly enter the reason "teaching" for the 1099NEC form, but do not make it the name of a business (since I never registered a business?)

3. Is schedule C really required for me?  How shall I make it clear that I have not registered a business, and schedule should not be applicable to me?

Thank you!

[AliciaP1]

If you do not intend to continue this line of work, meaning this was a one-time event, you can enter your 1099-NEC as other income.  If you intend to teach more lectures at this university, or other places, you are considered an independent contractor, and the IRS (not TurboTax) defines that work as self-employed work.  To report self-employed income on your tax return, you must file Schedule C.  You are not, however, required to have a name for your business.  You can simply leave the income (and expenses) for the work as shown with your name and social security number.

To delete your Schedule C and enter your 1099-NEC as other (sporadic) income in TurboTax Online please follow these steps:

1. Within your return in TurboTax Online search for Schedule C.
2. Click the Jump to Schedule C link in the search results.
3. If you get to a self-employment summary screen, delete the self-employment income line with the trash can icon.
4. If you get to the question Did you have any self-employment income or expenses? answer No. 
5. Go to the Wages & Expenses section of your tax return
6. Click Edit/Add for your form 1099-NEC
7. Input the details of your 1099-NEC and click Continue
8. Answer the questions and Continue until you get to the Does one of these uncommon situations apply? page
9. Choose This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common) and click Continue

If you intend to continue to teach in other places, you can see Am I considered self-employed? and What self-employed expenses can I deduct? for more details to report your Schedule C.

[Hal_Al]

Q. It seems that because I have received an 1099NEC form, Turbotax thinks I have registered a business. However, I have not registered a business. How shall I make it clear in Turbotax?

A. No. Filing a Schedule C, as a self employed person has nothing to do with any other law or  rules about businesses.  It's just how that kind of income is reported on your federal tax return.  And gets you to pay social security and medicare tax, on that income, in the form of "Self employment tax" (SET).

Q.  Is schedule C really required for me? 

A. Yes.  Because teaching is your regular occupation, any side gigs in that field are subject to FICA or SET.  

Q. "How shall I make it clear that I have not registered a business? 

A. You don't.  The IRS doesn't care.

Q. How shall I make it clear that schedule C should not be applicable to me?

A. You don't. It is applicable to you. 

[Hal_Al]

Although it may be news to you that you “have a business” (and most of the other people who get their first 1099-NEC); The IRS considers anything on a form 1099-NEC to be self employment income. Enter the 1099 income, at Other Common income / income from a 1099-NEC . TurboTax (TT) will complete Schedule C  for you and allow you to deduct any expenses associated with this income. You'll also have to pay self employment tax (social security & Medicare) on any profits greater than $432. These types of payments are frequently done this way. Your "employer" is not the only one.

There is an option (but you don't want to use it). 

There is a way to contest the “employer’s” classification of you as a contract employee. That is to pay your share of the Social security tax on form 8919 .In TurboTax, after you enter your 1099-NEC, select  "My employer reported this extra money on a 1099-NEC but it should have been reported on a W-2" from the drop down list at the  "Does one of these uncommon situations apply" screen.

You also have to submit form SS-8 and the IRS will determine whether you or the employer pays the employer portion of the SS tax. You will probably also upset your employer, because the IRS may contact him about whether or not he properly paid wages.

Form SS-8 is not in TT but is here ===>>> http://www.irs.gov/pub/irs-pdf/fss8.pdf
See this IRS site ===>>> http://www.irs.gov/taxtopics/tc762.html

[mulleryi]

Thanks a lot for your reply!

While filing out schedule C, how shall I figure out if the activity is a qualified trade or business under Section 199A?  The IRS website says " A qualified trade or business is any section 162 trade or business, with three exceptions:", and one exception is "The trade or business of performing services as an employee". I couldn't understand what is "The trade or business of performing services as an employee". If IRS considers anything on a form 1099-NEC to be self employment income, wouldn't everybody performing the service be considered as employee? I taught one lecture at a university, and I do not see myself teaching additional lectures in the near future, is the activity not a qualified business under Section 199A?

Thanks a lot! 

[Hal_Al]

Q. Is this activity  a qualified business under Section 199A?

A. Yes. The simple answer is: anything reported on Schedule C is  qualified for the QBI deduction. 

That said, the QBI hasn't been around long enough for it to be perfectly clear in all situations.  I would claim it, in your situation.