1099-NEC

[KGB3]

Hello,

I received 1099-NEC forms. It is asking me to fill out Schedule C, however I do not operate a separate business from my employer.  These are spiffs from Vendors that we work with, and when we sell their products, they have incentives or "spiffs".  This is not a commision.  How do I fill out the Schedule C when I do not own or operate a seperate business?

TIA

[MinhT1]

These SPIFF payments (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 report them as Other reportable Income, even if they are reported on form 1099-NEC.

In TurboTax, open your return and follow these steps:

• Click on Federal in the left-hand column, then on Wages and Income on top of the screen
• Scroll down and locate the Less Common Income section
• Click Show more and click Start next to Miscellaneous Income at the bottom
• On the next page, click Start next to Other Reportable Income.

[KGB3]

Thank you.  In prior years they sent 1099-MISC forms.  This is good info.

Kevin

[KGB3]

I entered it the way you described and it still reduced my refund by $480 for a $2000 entry.

[RaifH]

The steps @MinhT1 outlined above are the proper way to report this income without being charged any additional self-employment tax. It sounds like you are in the 24% tax bracket, which you can verify by finding your income and filing status in the tax tables. 

You can also verify it is being reported properly by previewing your 1040:

1. Open or continue your return.
2. Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
3. With the Tax Tools menu open, you can then view your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu
4. Scroll down until you see Form 1040 Schedule 1 Line 8z for Other Income. 

[KGB3]

Thanks again.  If I just use my adjusted income I am at 24%.  TT summary of 1040 shows effective tax rate of 16.02%

[DawnC]

The 24% rate is your tax bracket which is based on your Taxable Income (Line 15 of Form 1040) and Filing Status. 

• The U.S. uses seven federal tax brackets, ranging from 10% to 37%
• The progressive tax system in the U.S. has lower income levels pay lower tax rates than higher incomes
• As you earn more money, your income may fall into higher tax brackets, causing different chunks of your taxable income to be taxed at different rates
• Your effective tax rate looks at the overall taxes paid on your income, providing a better sense of your federal income tax bill as a percentage of your taxable income

Your marginal tax rate is the rate of the highest tax bracket that you'll be taxed in (for you it is 24%).  It is the tax you pay on each additional dollar of your income and the rate by which each dollar of deduction lowers your tax.   So, an additional 2K would be an additional $480 in tax.