Board of Director income

[AeroFlyer711]

We received a 1099-NEC for income for my wife being on bank board.  Is that just "other income" or is that subject to self employment tax.  I've seen answers steering me potentially in both direction.

Thanks...

[KrisD15]

1099-NEC is Non-Employee Compensation and is treaded as Self-Employment income. 

Had they used 1099-MISC, it could be labeled as something else, but the 1099-NEC is specific to Self-Employment. 

[AeroFlyer711]

So when TT asks me to enter her "Business" info for Sch C (description, name, address, EIN, etc.) what would go in there?  The first question in the section aske for a "description of your principal business or profession" but this money isn't coming from her main job/profession.

[PatriciaV]

Enter Form 1099-NEC under the Other Common Income topic, and use whatever description is accurate: "Board stipend," for example. After you enter the amount, the next screen will provide "uncommon situations" for this income. Check the box for "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby." 

This choice avoids the need for Schedule C and will report the income on Schedule 1 Line 8z Other Income. The total from Schedule 1 Line 10 flows to Form 1040 Line 8 as ordinary income.

@AeroFlyer711 

[AeroFlyer711]

I like that answer as that's what I've done the past two years before I accidentally didn't and it took me down this rabbit hole.  From what I see the IRS does typically treat board of director fees as self employment income. 

Even though the sporadic activity is "uncommon" according to TT and she meets every month that's still the appropriate option? 

I just want to verify if that's what is supposed to be done or if that's a work around to avoid SE taxes. 

Thanks for all the help everyone!

[PatriciaV]

You are correct. Generally, nonemployee compensation reported in box 1, Form 1099-NEC is subject to self-employment (SE) tax.

And the IRS specifically mentions Director's fees in the Instructions for Forms 1099-MISC and 1099-NEC:

Directors' fees.

You must report directors' fees and other remuneration, including payments made after retirement, on Form 1099-NEC in the year paid. Report them in box 1.

Other income would apply if the payment was a reimbursement of expenses.

[AeroFlyer711]

So that leads back to my question above:

So when TT asks me to enter her "Business" info for Sch C (description, name, address, EIN, etc.) what would go in there? The first question in the section asks for a "description of your principal business or profession" but this money isn't coming from her main job/profession...

I actually called the IRS and went through 4 people and got nowhere. 

[AeroFlyer711]

I called TT today and they helped me out.  When entering board member income check "none of these apply to me."  Then answer the questions in the business info section like their business is whatever industry the membership is for but that they work from essentially work home.  Business name and address is their name and address.

Now i have to amend two returns.  Hopefully that goes well.  I advise calling TT.  The first lady tried but wasn't very helpful (and we got disconnected).  The second lady was amazing!