WHAT IS THE DIFFERENCE BETWEEN NON EMPLOYEE COMPENSATION AND OTHER INCOME ON A 1099 MISC

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WHAT IS THE DIFFERENCE BETWEEN BOX 3 AND BOX 7 ON A 1099 MISC. FORM? OTHER INCOME AND NON EMPLOYEE COMPENSATION? I KNOW THAT ONE IS SELF EMPLOYMENT AND IS TAXED BUT WHAT ABOUT OTHER INCOME. iS IT PERSONAL OR BUSINESS?

[DeniseF1 · Accepted solution]

There are some major differences between them.

Self-employment income (Non-employee compensation)

• Money you earn as a contractor, consultant, freelancer, or other independent worker.
• It's reported on 1099-MISC (Box 7), 1099-K (Box 1a), or as cash, check or credit card sales transactions.
• Requires you to complete Schedule C.
• You can deduct expense related to the income.
• Requires you to pay self-employment tax.

Other income

• It's money you received from something like a prize, award, lawsuit settlement, etc.
• It's most often on a 1099-MISC (Box 3).
• You report it on Line 21 of Form 1040.

[Carl]

Box 3 is self-employment income. Box 7 may or may not be self-employment income.

[bmerchant]

1099-MISC

My father-in-law has a1099-MISC form from UAW  for legal services plan trust. He received to money. This is a retirement benefit. It is nonemployee compensation. The program keeps initiating a Schedule C for a business, which he does not have. How can I prevent this and delete the Schedule C form?

[bmerchant]

My father-in-law has a1099-MISC form from UAW  for legal services plan trust. He received to money. This is a retirement benefit. It is nonemployee compensation. The program keeps initiating a Schedule C for a business, which he does not have. How can I prevent this and delete the Schedule C form?

[bmerchant]

1099-MISC

My faterh-in-law has a1099-MISC form from UAW  for legal services plan trust. He received to money. This is a retirement benefit. It is nonemployee compensation. The program keeps initiating a Schedule C for a business, which he does not have. How can I prevent this and delete the Schedule C form?

[bmerchant]

My faterh-in-law has a1099-MISC form from UAW  for legal services plan trust. He received to money. This is a retirement benefit. It is nonemployee compensation. The program keeps initiating a Schedule C for a business, which he does not have. How can I prevent this and delete the Schedule C form?

[Critter]

You can report it as other income on Sch 1  line 21. Here's how to enter it in TurboTax.

• Click the Federal Taxes tab ( Personal in the Home & Business version)
• Click Wages & Income. (Personal income in the H & B version)
• On the screen "Your 2018 Income Summary," scroll all the way down to the last section, "Less Common Income."
• Click the Start or Update button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."
• On the next screen, "Let's Work on Any Miscellaneous Income," scroll down and click the Start or Update button for the last topic, "Other reportable income."
• The next screen asks, "Did you receive any other taxable income." Click Yes.
• On the next screen, "Other Taxable Income," enter a description and the amount. Click Continue.
• On the next screen click Done.

The income will be reported on Sch 1 line 21 with the description that you entered.

[Critter]

1. With your return open, search for this exact phrase:business (schedule c) (include the parentheses) and then click the "Jump to" link in the search results.
2. Answer Yes when asked if you had (or want to work on) business income and expenses for 2016.
   • That's right – you'll need to answer Yes, even though it doesn't make sense.
   • If you're being forced to upgrade to Home & Business,contact us for further assistance.
3. When you get to the Business info or Business Summary screen, click Delete next to the defunct business.
4. Answer Yes to confirm the removal of all business-related forms.

[Carl]

Income reported in box 7 is self-employment income. To claim it as otherwise will most likely result in a paper audit-by-mail.

Income reported in box 3 "could" be self-employment income. But it's for other things such as one time payment for prizes, awards, bonuses and other things like that.

To delete the SCH C work through the Business Income & Expenses section *AS* *IF* you desire to report self-employment income. Then on the screen that list the business name (whatever name you entered if any)  click the DELETE button and work it through to delete the SCH C.

When entering the 1099-MISC pay attention to detail on each screen. The small print matters. All of it. Big time.

[bmerchant]

See https://ttlc.intuit.com/community/business-taxes/discussion/if-i-received-a-1099misc-for-a-professio...
PaulaM
Employee Tax Expert
June 1, 2019 10:57 AM
Ordinarily 1099-MISC box 7 non-employee compensation is considered self-employment income and entered on a schedule C. 

However, the 1099-MISC form instructions say 'If you are not an employee but the amount in this box is not SE income (for example, it is income from a sporadic activity or a hobby), report it on Form 1040, line 21.
Select Less Common Income, Miscellaneous Income. Then select Other Reportable Income and enter the description and amount. Enter something like 'Professional award reported in box 7' or something similar.
You will see a warning not to enter a 1099-MISC. That is because it is usually self-employment income. But in your case, this is where it belongs. Delete the 1099-MISC if you have entered it elsewhere.
https://www.irs.gov/pub/irs-pdf/f1099msc.pdf

[dgoldinsky]

After referring 2 residents to my apartment building in 2019 I received 2 separate resident referral bonus checks in the mail from the corporate leasing office valued at $750 each. Later on I received a 1099-MISC form in the mail with $1500 listed in box 7 "Nonemployee Compensation". When I file online the deduction is equivalent to over 30% which seems extremely high. I tried calling my leasing office and the corporate office, no answer. Could this be a mistake? Should the total value have been listed in box 3 "Other income"? Please advise. 

[ebuddha7]

My question is about consignment items. I own a small shop and sell items on consignment for a person. The amount is over $600. He is not an independent contractor (At least I don't think so technically). Do I report that money in box 3 "other income"? It seems very vague if I even have to file 1099-Misc as "merchandise" seems exempt.   

[Tyrone _1997]

1099

[SBhamilton]

This is how I reported my husband’s 1099-MISC for 2016 and 2018. Now I’m getting a CP2000 from the IRS showing that we have to pay over $5000 in self employment taxes. Is there any work around this now? This is not his full time job, just a side hobby. 

[Mike9241]

a hobby or a side business

The IRS defines a hobby as an activity that an individual pursues without intent to generate a profit. Almost everyone partakes in some sort of hobby without worrying about whether it will generate income. However, as soon as you take steps to attempt to generate a profit you’ve got a business on your hands. de hobby or a side business.

whereas a business

The IRS usually considers you in an activity for profit if you’ve made a profit for three of the past five years. Otherwise, you have to establish a profit motive. You will determine your profit motive based on factors like:

If you carry on the activity like a business
Your expertise
Time and effort you spend on the activity
Your success in carrying on other similar or dissimilar activities
Your history of income or losses for the activity
Amount of occasional profits, if any, that you earn
Your financial status
If the activity has elements of personal recreation

If the activity is a hobby, you will report the income on Schedule 1, line 8 of Form 1040. The income won’t be subject to self-employment tax.

Because of a change made as part of tax reform, you won’t be able to deduct expenses associated with your hobby.

You won’t be able to claim the home office deduction. You can only claim that deduction if you have business income.

if it's a business it gets reported on schedule C, you deduct expenses on the form and pay self-employment tax on the net income. if profitable you would get a QBI deduction you.

you can pay to use TT audit defense to help you in this situation.  but if it's a business, you'll have to pay up.

The Audit Defense service is provided by TaxResources, Inc., also called TaxAudit.com, in partnership with TurboTax. If you paid for Audit Defense and you received an IRS notice, call TaxResources, Inc. at 877-829-9695, or report your IRS notice on their web site at http://intuit.taxaudit.com/. Do not contact the IRS until you have spoken to TaxResources. They may contact the IRS on your behalf. be prompt the IRS gives you a deadline to respond by. if you don't they take the position you agree with them so if payment isn't made paychecks are garnished, liens are placed on your property, etc. 

[Tyrone _1997]

I didn’t get my taxes return 1099