1099-NEC Does this fall under, "sporadic activity or hobby"

[eaglei22]

My wife decided to try selling Monat products from the company Monat Global. She got commission doing so for a couple months but decided it wasn't for her. She made enough to get a 1099 NEC from the company. I am confused on how to fill this out.

After filling out the 1099 NEC info on TurboTax asks, "Does one of these uncommon situations apply?" One of the options being, "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common)." If I select this, then my tax return dollar amount goes down, and then that is it for the section.  Otherwise the, "None of these apply to me" would be the next best option, which tells me a Schedule C is necessary.

Because my wife just did this on a whim, and doesn't have a business or anything, can I consider this a sporadic activity or hobby? Or will she need to still fill out a schedule C? If she doesn't have a business or anything, then how would she fill out the schedule C?

[ColeenD3]

This is self-employment income. This project was entered into with a profit motive. An example of a hobby would be collecting stamps and occasionally selling one.

This is not sporadic; it just didn't work out. This almost always happens with MLMs.

She will file a Schedule C and indicate that she earned the money by selling the product. She can take any expenses she incurred against the income.

We'll automatically complete Schedule C when you set up your self-employment work in TurboTax or when you enter what the IRS considers self-employment income, which is usually reported on Form 1099-NEC or 1099-MISC.

Schedule C is supported in TurboTax Self-Employed (both online and in the mobile app) and in all personal 1040 versions of the TurboTax CD/Download software.

To set up your business:

1. Open or continue your return.
2. Search for schedule c and click the Jump to link in the search results.
3. Answer Yes to Did you have any self-employment income or expenses?
   • If you've already entered self-employment work and need to enter more, select Add another line of work.
4. Follow the onscreen instructions.

[eaglei22]

Thank you for your response! So when Turbotax asks about a business name, address, and code, if there isn't an actual business, what is recommended to put in these areas?

Turbotax asked me what the type of work performed was, when adding the 1099-nec. I put, "sales" and that's what Turbotax used for the, "business" name, "sales" when creating the schedule C.   So here would the description work for the business name, and should I leave it that way? For the address would I use my home address? And for the business code, do I find something that best matches? I just don't know how important these fields are.. I am assuming the most important part of all this is the IRS getting their share, and the rest is just a nice to have for records and reference when it's not an actual business. 

[RaifH]

Here's some advice about the General Information of your wife's business:

• The Business Name can be left blank if your wife did not officially register any.
• The Business Address should be your home address assuming she did not have a separate office.
• The Work Description and Work Entry will be based on what you have entered as the nature of her business.
• You will want to make sure to mark that the business both started and ended in 2021.
• For the business code, this is the system's determination based on the Work Industry you provided. If you provided an accurate Work Industry, the default should be just fine, but if you really want to nail it down, you can try this website.

[Anna7271]

My husband works regularly for a company who treats him like he is self-employed, therefore sent him a 1099-NEC. He does not have a business. How can this be considered SE income if there is no sole-proprietorship (or other) business to list? He had the same situation in 2020 and his income from this place (1099-nec) was about $2000 less than it was in 2021 but dropped our expected return from $1,900 to $303. That did not happen last year. Has something changed in the law? From the way it is now, we are better off if he were not working at all, which makes no sense. Are we risking some problem for not having an actual business license of some sort? We are in Ohio

[ThomasM125]

Whenever you are paid for ongoing services rendered and the income is reported on a 1099-NEC, the IRS considers this self-employment income. Your only other option is to have your husband paid as an employee, if he qualifies as such. The law on this has not changed in recent years.

You may need a business license. You probably need to visit your local tax collectors office to check on that.