Business Tax

[BrunswickBeaches]

I filed with Turbo Tax in 2021 for the first time.  I work two jobs.  One is in Companion Care and I get a W-2.  The other is as a realtor and I get a 1099-NEC.  I think the 1099-NEC first appeared in 2020?  I made a mistake and treated it as MISC income in 2021.  I didn't realize my mistake until I went to do my taxes this year and realized there was now a 1099-NEC.  Now I need to re-do 2021 before I can file the 2022.  How do I go about doing that?

[TomK2023 · Accepted solution]

Did you receive a 1099-NEC in 2021?  

Starting in tax year 2020, the IRS reinstated Form 1099-NEC to report nonemployee compensation that used to be reported on box 7 of the 1099-MISC form.

Box 7 no longer reports nonemployment compensation now that the 1099-NEC form is being used. The 1099-MISC is mostly used for miscellaneous income like rent or royalties.

You'll get a 1099-NEC if you:

• Worked as a contractor or freelancer
• Were paid for your self-employed goods or services
• Previously received these payments on a 1099-MISC

To enter your 1099-NEC in TurboTax:

1. Sign in and open or continue your return
2. Search for 1099-NEC and select the Jump to link
3. Answer the questions and continue through to enter the information from your form
   • If you have multiple 1099-NECs to enter, you can select +Add Another 1099-NEC on the 1099-NEC Summary screen

When you’re done, we’ll ask you a few questions and help you through entering any expenses you may have so that you can reduce your taxable income.

To Amend your return from a prior year if you used TurboTax Online last year:

1. Sign in to TurboTax
2. On the home screen, scroll down to Your tax returns & documents and select the year you want to amend
3. Select Amend (change) return, then Amend using TurboTax Online
   • If you're told to amend your return via TurboTax Desktop, follow the steps for TurboTax CD/Download below instead
4. On the screen OK, let's get a kickstart on your amended return, select the reason(s) you're amending and Continue
5. When you reach Here's the info for your amended federal return, select Start next to the info you need to change
6. Continue through the screens, make the changes you need to make, and carefully answer the remaining questions to finish amending your return

[BrunswickBeaches]

Thank you for your reply. 

Yes, I did get a 1099-NEC in 2021, but I ignorantly assumed 1099-MISC, since that was what it always was before.  I didn't even look at the NEC part.  This year I did look, and realized that I received a 1099-NEC in 2021 and I entered the wrong form in 2021.  That error continues to this year, as Turbo Tax assumes I'm doing a 1099-MISC again this year.  It won't let me enter 1099-NEC.  My return for 2022 seems to be all messed up because of this.  It seems to me that in order to get back on the right track I have to amend 2021 so Turbo Tax knows I received a 1099-NEC.  I'm guessing I'll owe taxes for 2021 instead of getting a refund.  Ugh. 

So, to correct all this, how hard is it?  I just read a comment that it was difficult to amend a return electronically.  Is that true? 

P.S. I have an appointment with the local Senior Center to see if they can help me sort out this mess as I realize I have no idea what I'm doing.

[AliciaP1 · Accepted solution]

It shouldn't be too hard to amend for you since you will just need to delete the 1099-MISC after you start the amendment and then enter the 1099-NEC.  Be sure to check What self-employed expenses can I deduct? for any "ordinary and necessary" business expenses to help reduce your 2021 self-employment taxes (TurboTax will calculate this for you when you enter the income and expenses).

Since you have already started your 2022 tax return, your best option for that will be to "clear and start over" once you have amended 2021.  Then you can roll in your correct 2021 return and have a clean start to 2022.

To clear and start over your return in TurboTax Online you can follow these steps:

1. Sign in to TurboTax and open or continue your return, if you haven’t already
2. Select Tax Tools from the left menu, then Clear & Start Over
3. Answer Yes to confirm

@BrunswickBeaches 

[BrunswickBeaches]

Thank you so much!  I will try that. 

I asked another question in the community that's confusing me.  Under Business Income and Expenses, Turbo Tax asks if I actively participate in my 'business'.  I'm a realtor/broker.  I work for a brokerage as an independent contractor.  I'm not an LLC or a business.  I don't have an EIC.  I use my SSN for my business.  I do not have employees.  It's just me.  Is Turbo Tax asking if I actively participate in the brokerage I work for, or are they referring to me as an independent contractor in my own business?  I do not actively participate in the brokerage, but I have a home office where I conduct all my own business.  I suspect this is an important question.

[LindaS5247]

Yes, the correct answer would be that  you are an active participant in the work that you do as an independent contractor.