1099-NEC taxed twice

[aduttasahad]

Hi, 

I have couple of 1099 NEC income that I entered under self employment option in turbo tax.  As a result, it appears in line 8 (income from schedule 1) and therefore gets added to the AGI and is taxed along with my other income, which appears on line 22 after all the adjustments/credits. But I also noticed that the corresponding self-employment tax for the same 1099-NECs appears in line 23. I think Line 23 is where SE tax should appear but then why is the 1099-NEC income gets added to my AGI as well in Line 8. It seems that I am being taxed twice for my 1099-NEC income, one as a part of the AGI and then again on line 8. Can you explain if this is an error in TurboTax or am I missing something? 

Thanks.

[AnnetteB6 · Accepted solution]

You are getting taxed twice on the income reported on Form 1099-NEC.  Since the income is from self-employment, it is subject to both income tax (being added to your other income) and self-employment tax (added to your total tax).  The situation you are seeing on your return is correct as you described it.

Since you are self-employed, you do not have an employer that is withholding Social Security and Medicare tax from your income.  If you were an employee, these taxes are automatically withheld from your wages and submitted to the government by your employer.  Half of the amount is paid by you through withholdings from your wages and the other half is paid by your employer.  

When you are self-employed, you are responsible for paying the full amount of Social Security and Medicare tax.  This is done in the form of Self-Employment tax and it is collected through filing your tax return.

To learn more, take a look at the following TurboTax article:  What is the self-employment tax?

[tracifritzmd]

That helps but not really. I filed for an extension, paid same amount upfront last year when I made more money. My Corporate slave Dr job messed up the the 1099 Sec forms. Un-bonus new fun rule in Wisconsin can't renew my medical license until taxes are sorted. I already paid them too much. 

I clicked on the link to get in line for 10/12/2021 and turbotax just does nothing.

[PCSC]

I have entered my 1099-NEC, and I am not Self-employed, but I am the only employee of my company.  I do pay all taxes through Quicken Books and have recorded them as required in Turbo Tax.  Turbo Tax had me enter the 1099-NEC in two different places and seems to be doubling the taxes owed.  This was not an issue in 2020.  In one the of information blocks it indicates that last year's 1099-MISC would be automatically moved to the correct line, which it is not doing. 

[JamesG1]

@PCSC

Do you mean that you are being taxed twice, once for income tax and once for self-employment tax purposes?  Please clarify.

What taxes have been paid through Quicken Books?  Federal withholding taxes?

What two places have you entered the 1099-NEC information?

The IRS is likely to make the presumption that 1099-NEC income should be reported as self-employment income.

2020 Instructions for Forms 1099-MISC and 1099-NEC under What’s New states:

Beginning with tax year 2020, use Form 1099-NEC to report nonemployee compensation.

Non-employee compensation refers to the money a company pays to an independent contractor who performs contingent work.

[PCSC]

Yes, I am being tax twice. 

Quicken Books online handles my Federal Withholding, New Mexico Withholding, Social Security, Medicare and FUTI.

The 1099-NEC was entered under 1099-MISC & Other Common Income and under Business Items.  I even tried deleting the amount under Other Common Income to see if that would resolve the issue with no luck.

When you enter the 1099-NEC amount under Business Items the tax due goes off the scale, and the reason for it seem to be when you get to the Business Summary page it indicates a Gross Income of exactly twice the amount entered for the 1099-NEC?

I have used Turbo Tax for years and this is the first time that I must be missing something, or Turbo Tax is calculating something wrong.

[VolvoGirl]

If you are importing the QuickBooks info then do not enter the 1099 separately again.  Only enter anything in 1 place or 1 time.    You probably are reporting your income in QB.  You don't need to enter the actual 1099NEC in Turbo Tax.  Just the total gross income.  Only the total income goes to schedule C line 1.  

[PCSC]

No, I did not import the Quicken. The only way that I seem to be able to get Turbo Tax to calculate correctly is to fill in the 1099-NEC under Other income and when I get to Business Income, I fill in everything but the amount.

[PCSC]

Here is the weird part.  When I enter the 1099-NEC under other Common Income, the amount does not show up after you say Done.  You can go back in with Update and the amount is still there on the 1099-NEC but not on the Summary sheet Under 1099 MISC & Other Common Income?

[DanielV01]

@PCSC  What you are reporting sounds like you should be issued a W-2, not a 1099-NEC.  All of your taxes are withheld.  Form 1099-NEC is for contractors who typically have no taxes withheld.  Do you know why you are issuing yourself a Form 1099-NEC?