Dependent and 1099-NEC

Forum|Forum|4 years ago
February 22, 2022
1 reply
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After reading all the confusion about entering 1099-NEC forms received by my dependents, I'm still confused 🤔 🤔. My son is a dependent on my return and I am creating a return for him that says he can be claimed as a dependent on someone else's return. He is not self-employed nor does he own his own business.

I enter his 1099-NEC on his return and that is fine. It then says the 'Business Income and Expenses (Sch C)' section needs review. The first question in that section asks if you have any business income and expenses.

HOWEVER, and I quote, 'But before you say "yes", if you have 1099-MISCs or 1099-NECs, it's better to enter them under 1099-MISC and Other Common Income.'

Having already done that, is it still necessary to say 'Yes' to business income? It then asks for information that does not pertain to him (such as Business Code, Accounting Method and it asks for any 1099-NEC income again).

Thanks for the clarification, Val.

Vanessa A

Level 15

Yes, you need to answer yes to business income.

The fact that he has a 1099-NEC says he is likely performing some sort of business or independent contractor type work. If he is performing work for someone and not being paid as an employee, he needs to fill out a Schedule C, regardless of age. Schedule C is for independent contractors too.

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vtpecoAuthor

Level 2

Thank you. A couple of follow up clarifications....

I'm using 'Cash Method' as the accounting method and he did NOT play an active role in the business (he worked less then 500 hours).

I also did not re-input the 1099-NEC as it was already entered in the '1099-MISC and Other Common Income' section, and said the work is NOT qualified (QBI). His 1099-NEC was work work done as an intern at a college during the summer.

Thanks again for the help. Val.

Vanessa A

Level 15

That's what I'm already doing. As I've already mentioned. My son is a dependent on my return. I am filing a separate return for him and indicating he can be claimed as a dependent on someone else's return.

How do I enter a 1099-NEC on my son's return as earned income and it not try to tax it at my rate.

Try clearing the return and starting over. To do this click Tax Tools>>Clear and Start Over. This will remove any other hidden forms and not have you trying to delete the problem forms. It sounds like something you entered made the program think this was unearned income. The 1099-Misc can sometimes report unearned income so depending how the questions were answered, this may have triggered the kitty tax.

Then after you enter his personal info go directly to the business income section.

To enter your self-employment income click the following:

Federal
Income and Expenses
Show More next to Self-Employment
Start or Revisit next to Self-Employment
Yes, to you have any self-employment income or expense
Enter the type of self-employment work you do
Click through a few more screens and you will get to a screen that says "Your XX info"
Click Looks good
Then you will come to a screen that says Let's enter the income for your business. It will give you the option of 1099-NEC or Other self-employed income including the 1099K , cash and checks. Select the one that applies to you and hit continue
If you do not select one, it will not let you enter your income
Enter the 1099-NEC income on the next screen

Also, remember, when you enter his forms, it may seem like a higher tax rate than it seems it should be because he will be paying an extra 15.3% for self-employment tax.

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