1099-NEC Manufacturer Incentive

[rontwo1964]

I worked for Company A.  As an employee of Company A I was involved in the sales of office equipment.  Manufactures of the equipment that I sold paid me sales awards (Spiffs) for the sale of the equipment.  One manufacturer reported the income on a 1099-Misc and the other reported income on a 1099-NEC.  I do not operate a business and do no other work besides what is required by Company A.  Turbo Tax will not let me enter an amount for 1099-NEC.  I can enter the 1099-MISC income and check manufacturer incentive under other income.

[ColeenD3 · Accepted solution]

*SPIFF (Special Performance Incentives for Field Force)  payments reported on Form 1099MISC (and now 1099-NEC); (1) are not treated as wages, (2) are not subject to federal income tax withholding, social security, Medicare, or federal unemployment tax, and (3) are not considered to be self employment income and, therefore, are not subject to self employment tax.

You can add it as other income

     Wages & Income

• I'll choose what I work on
• Less Common Income select Start (or Update) for 
• Miscellaneous Income.
• Other reportable income and you can enter your own description(s) and amount(s).

[rontwo1964]

So am I required to fill a Schedule SE?

[rontwo1964]

Sorry for the spelling, file a Schedule SE?

[JoannaB2 · Accepted solution]

It depends.  If the amount reported was entered on line 3 on form 1099-Misc or 1099-NEC, it's other income and needs to be  entered on line 8, Part 1, Addtional Income of Schedule 1 as Other Income.  On the other hand, if the amount was entered on line 7, you must file Schedule C form. 

You may contact your employer and verify if the income was a commission or incentives

before finalizing your income tax return.

[erbrown79]

Hi, this was super helpful. However my Turbo Tax is requiring me to enter the 1099-NEC in a different field from 1099-MISC (I have 4 different 1099's for SPIFFs, 2 are NEC and 2 are MISC). The 1099-NEC are being subjected to the self employment tax. 

So the 1099-MISC are good to go, but how do I enter the 1099-NEC without getting hit with the self employment taxes?

[Critter-3]

STOP TRYING TO ENTER ANY 1099 ... DELETE THEM THEN FOLLOW THESE INSTRUCTIONS:

You can report it as other income on Sch 1  line 8. Here's how to enter it in TurboTax.

• Click the Federal Taxes tab ( Personal in the Home & Business version)
• Click Wages & Income. (Personal income in the H & B version)
• On the screen "Your 2020 Income Summary," scroll all the way down to the last section, "Less Common Income."
• Click the Start or Update button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."
• On the next screen, "Let's Work on Any Miscellaneous Income," scroll down and click the Start or Update button for the last topic, "Other reportable income."
• The next screen asks, "Did you receive any other taxable income." Click Yes.
• On the next screen, "Other Taxable Income," enter a description and the amount. Click Continue.
• On the next screen click Done.

The income will be reported on Sch 1 line 8 with the description that you entered.               

[erbrown79]

Thank you! I have 4 1099's - can I add them up and enter as one amount or do I need to itemize?

[Puckhog66]

Can 1099 NEC for SPIFF's be added together under other miscellaneous income or do they need to be entered separately?

[Critter-3]

They can be added together and entered as one if you wish. 

[Puckhog66]

Thanks!

[cdkerby]

Hello! Does this still apply for 1099-MISC and 1099-NEC obtained specifically for SPIFFS this year (filing for 2021 taxes)?

[JulieS]

Yes, it still applies. Please follow @Critter-3 instructions above for SPIFFS payments. 

[pruebel]

Won't the IRS still be expecting to see the income where the 1099 NEC's would be entered and follow up?

[JamesG1]

It is always possible that the IRS will ask questions at some point.

Retain copies of the 1099-NEC with a copy of page 34 from this IRS publication referencing manufacturer incentive payments.

You must include as other income on Schedule 1 (Form 1040), line 8z (or Schedule C (Form 1040) if you're self-employed), incentive payments from a manufacturer that you receive as a salesperson. This is true whether you receive the payment directly from the manufacturer or through your employer.

@pruebel