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merrillc77_7
Returning Member

Question about self-employment/1099-NEC

I am trying to do my 21-year-old daughter's taxes. She is a student and received two 1099-NECs from an internship and a job. I think this should be considered self-employment income, but TurboTax doesn't say anything about self-employment and keeps asking us to name the "business" that earned this income. We do not know how to proceed. For each 1099-NEC TurboTax asked us to name the kind of work she did (internship, research and writing) and then has decided she has two separate businesses. Any advice on how to proceed? 

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3 Replies
FrankP7
New Member

Question about self-employment/1099-NEC

NEC stands for Non-Employee Compensation. That just means your daughter did (contract) work for a company but wasn't their employee. My wife buys essential oils and has people signed up under her, so she gets income from sales and a Form 1099-NEC from the essential oils company. This is considered a business by the IRS. The name of the "business" doesn't matter. I just call it "Health Products Distributor". Turbotax just needs a name to associate with each form 1099-NEC that you have. It will fill out a Schedule SE for your daughter's self employment income and whatever other forms it needs. Just make up business names that describe the type of work she did. It will ask you all the questions it needs to in order to process these properly. I hope this helps!

DawnC
Expert Alumni

Question about self-employment/1099-NEC

It is self-employment income and you are in the right spot.    You can check the box that says she uses her own name for her business name.   You daughter is considered the owner of her own business for tax purposes; she is not an employee.   The answers there should pertain to her, so her name, the business address is her home address.    All of her business info goes to her Schedule C (TurboTax does this automatically).    She may do this type of work for multiple other businesses, so she may have multiple different 1099-NECs.   

 

If the type of work she did is related, all of the 1099s go on the same Schedule C.    The only place she will reference the name of the businesses she did work for is on the 1099-NEC entry screens.    All the other entries for Schedule C are asking about your daughter's business - which she does in fact own.   Now if the work she did for one was totally different than the type of work she did for the other, she would have 2 different Schedule Cs.    She needs a separate Schedule C for each type of work.   If she did office admin stuff for both jobs, that is one business/one Schedule C.   But if she did hair coloring for one client and bookkeeping work for the other, that would be a 2 Schedule C situation.   In this case, she has to divide the income and expenses between the 2 different lines of work - so she would have 2 Schedule Cs.   

 

How do I add self-employment income on a Schedule C in TurboTax? 

 

When TurboTax asks which business the income belongs to - it is asking which Schedule C should report this income.   Depending on the type of work, she may need 2, but if it is similar work, create 1 Schedule C for her business (her name and home address - her SSN, no EIN) and apply all 1099s to that Schedule C.   

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KrisD15
Expert Alumni

Question about self-employment/1099-NEC

Yes, that would be considered Self-employment income. 

 

When TurboTax asks about the business, it is asking about your daughter's business since she is considered as self-employed. 

 

Your daughter will need to file as if she is in business herself and set-up some sort of "business" profile to apply the income to. 

She will pay both parts of her FICA tax (the employee's AND employer's portions) but she will also get a credit for half the tax. 

She should also get the QBI (Qualified Business Income deduction), depending on the type of service she supplied. 

 

@merrillc77_7

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