If your wife received a 1099-MISC then the payer did not pay the employer portion of the Social Security and Medicare tax. This is why the tax increases when the 1099-MISC is added in. The income is subject to Medicare and social security tax as well as income tax.
According to the IRS, "If payment for services you provided is listed on Form 1099-MISC the payer is treating you as a self-employed worker, also referred to as an independent contractor.
- You don't necessarily have to have a business for payments for your services to be reported on Form 1099-NEC. You may simply perform services as a nonemployee.
- The payer has determined that an employer-employee relationship doesn't exist in your case."
The 1099-MISC would need to be listed under the self employment section in TurboTax.
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