1099-Misc Confusion

[gortified]

I am a consultant.  I am not self employed nor an employee.  I am not considered a independent contractor.  I only received money as a consultant/non-employee.  I got a 1099-misc, entered all the data in turbotax and am lost.  I am asked questions like report any gains or losses?  I guess a gain might be what I earned but I cannot help but feel that the 1099-Misc is not the correct form.  What is right, next, etc.  Thanks.

[LeonardS · Accepted solution]

When you work as a consultant, you are considered a self-employed individual for income reporting purposes.  If you earn more than $600 in a year, the client has to provide you with a Form 1099-MISC, the IRS is also provided a copy.

You will enter all your Form 1099-MISC income and expenses related to your consulting business on Schedule C Profit or Loss from Business.

[Steve M]

I received a 1099-misc for being a volunteer Fireman. The amount was $1765 which is over the $600 but I'm not  self employeed. This $$ is what is received for making medical and fire calls, is there a way around this tax since I'm not a business ?

[KrisD15]

Yes, you can eliminate the Self-Employment tax, but you can't write off any expenses. 

Click Federal

Click Wages & Income

Click “See All Income” if needed

Scroll down (PAST SELF-EMPLOYMENT) to “Other Common Income”

Click “Show more”

Scroll down to “Form 1099-MISC”

Click Start

Enter the 1099-MISC and Continue

On the “Describe the reason for this 1099-MISC” screen enter something like “Volunteer Firefighter” and Continue

Select “None of these apply” and Continue

Select “No, it didn’t involve work like main job” and continue through the interview selecting the appropriate answers for a one-time payment to cover expenses and not job related work

Report that this was the first year you received this 1099-MISC

The amount from the 1099-MISC will be reported as Other income on the 1040 line 7a, not as Self-employment

[Steve M]

Thank You...it solved my issue

[flyinxlt]

This was exactly what we needed.  Thank you for outlining the steps.  It was very helpful!!

[thetrgibsons]

Thank you for the clear explanation - though the text has changed slightly, but this method still registered the amount entered for the 1099-misc in the Business Income and Expenses (Sch C) section.

I do not have a business so I don't understand why I have to pay more taxes just because this side gig decides to pay me as a non-employee. I should only file Sch C if I own a business right? Can I just enter the amount of income on Sch 1, line 22 and not enter it as 1099-misc income?

[thetrgibsons]

Correction - Can't I just enter the income on Sch 1, Line 8? (Sch 1, Line 8, Other Income Statement, Line 22) 

Entering it as a 1099-Misc and having "Business Income" results in paying $236 more in taxes when I don't own or operate a business. I just work a side gig in the summer and the employer chooses to not make me an employee so I do not get a w2.

Thanks!

[KrisD15]

Right, if you are an employee, your employer should issue you a W-2. 

If you are doing a "side gig" that sounds like you are self-employed. 

Remember also that the only difference in tax is that the portion of your FICA (social security tax) that is paid by the employer when you're an employee is paid by you when you're self-employed, AND you get a credit for half of that on your 1040. The biggest difference is that the tax is not withheld from your paychecks as it is when you are an employee, so you have to pay it on your tax return. .

Here is a link about the difference between a 1099 contractor and a W-2 employee. 

1099 or W-2

If you feel that you should be treated as a W-2 employee, you can lodge a complaint against the employer by filing Form SS-8 with the IRS.

 IRS Form SS-8

[BeckyBat]

I've been trying to figure this out for 2 hours. THANK YOU!

[LeonardS]

When you work as a consultant, you are considered a self-employed individual for income reporting purposes.  If you earn more than $600 in a year, the client has to provide you with a Form 1099-MISC, the IRS is also provided a copy.

You will enter all your Form 1099-MISC income and expenses related to your consulting business on Schedule C Profit or Loss from Business.

[facjsmith]

When I enter my 1099 MISC information Turbo Tax automatically adds it in the Business Income section as Schedule C.  Now it's listed twice under the Income tab.  Isn't this double reporting this amount?

[KrisD15]

If you only entered it once, it should only be counted once. 

I do think that the program tells you your business income AND THEN tells you your income, so in that sense it might seem like the program is counting it twice, but it's just that your business income is included in your total income. 

[BJM5]

Good instructions for entering a one time pymt for research & translating not related to my job- the income amt is now showing on the 1040 line 7a schedule but I am still getting  schedule C  errors wanting me to put in information for a business.  Can I just leave out the schedule C in my printed return since it has no information on it?  If I can't get rid of the schedule C in the program will this messup my state return which I haven't input yet?

[AnnetteB6]

Yes, since your income has been reported elsewhere on your tax return, the Schedule C is not needed.  

Use the following steps and then click the trash can or delete beside the Schedule C business to remove it:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “schedule c” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to schedule c”
• Click on the blue “Jump to schedule c” link

@BJM5