Solved: Received 1099-misc box 7 (>$600) from gift cards issued to me. Can I report income only to line 21 Form 1040 or do I need to file schedule SE? I am not self-employed.
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New Member

Received 1099-misc box 7 (>$600) from gift cards issued to me. Can I report income only to line 21 Form 1040 or do I need to file schedule SE? I am not self-employed.

Per IRS "If you're not an employee of the payer, and you're not in a self-employed trade or business, you should report the income on line 21 of Form 1040, U.S. Individual Income Tax Return, and any expenses on Schedule A (Form 1040), Itemized Deductions".
However turbotax app when I fill the info of the 1099-MISC pops up the Schedule C, so wasn't sure. Gift cards were received because of some online training.
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Level 15

Received 1099-misc box 7 (>$600) from gift cards issued to me. Can I report income only to line 21 Form 1040 or do I need to file schedule SE? I am not self-employed.

You need to explain the circumstances of getting this 1099-misc. Who gave you the gift cards and why? Would did you do for them*.

The IRS considers anything in box 7 of 1099-MISC to be self employment income. TurboTax (TT) aggressively steers you in that direction. If you try reporting box 7 income as anything else, you chances of hearing from the IRS are very high.

 

That said, the key to getting TT to treat it as other income is to follow these steps:

 Enter the 1099-Misc

On the next screen Describe what the payment was for

On the next screen select "none of these apply"

On the next screen select "No it didn't involve work like my main job"

On the next screen select "I got it in 2016" ONLY

On the next screen select No, it didn't involve intent to earn money

TT will put the amount on line 21 of form 1040 as other income

 See http://www.journalofaccountancy.com/Issues/2009/Jul/20091639.htm

*You say the Gift cards were received because of some online training. that usually means you were being trained to perform some service for them. Just because you didn't go any further, with them, doesn't necessarily mean it isn't self employment income. But, it may qualify for the "one time gig" exception.

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Level 15

Received 1099-misc box 7 (>$600) from gift cards issued to me. Can I report income only to line 21 Form 1040 or do I need to file schedule SE? I am not self-employed.

You need to explain the circumstances of getting this 1099-misc. Who gave you the gift cards and why? Would did you do for them*.

The IRS considers anything in box 7 of 1099-MISC to be self employment income. TurboTax (TT) aggressively steers you in that direction. If you try reporting box 7 income as anything else, you chances of hearing from the IRS are very high.

 

That said, the key to getting TT to treat it as other income is to follow these steps:

 Enter the 1099-Misc

On the next screen Describe what the payment was for

On the next screen select "none of these apply"

On the next screen select "No it didn't involve work like my main job"

On the next screen select "I got it in 2016" ONLY

On the next screen select No, it didn't involve intent to earn money

TT will put the amount on line 21 of form 1040 as other income

 See http://www.journalofaccountancy.com/Issues/2009/Jul/20091639.htm

*You say the Gift cards were received because of some online training. that usually means you were being trained to perform some service for them. Just because you didn't go any further, with them, doesn't necessarily mean it isn't self employment income. But, it may qualify for the "one time gig" exception.

View solution in original post

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New Member

Received 1099-misc box 7 (>$600) from gift cards issued to me. Can I report income only to line 21 Form 1040 or do I need to file schedule SE? I am not self-employed.

The gift cards were given for completing a manufacturer's online certifications. No service or sale was completed for the manufacturer from my end. The online certs were completed at my own leasure and pace.
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Level 15

Received 1099-misc box 7 (>$600) from gift cards issued to me. Can I report income only to line 21 Form 1040 or do I need to file schedule SE? I am not self-employed.

There's a slightly different way to handle a "manufacturer's incentive". And, you are correct, it is not subject to self employment tax.
SPIFF (Special Performance Incentives for Field Force)  payments reported on Form 1099MISC; (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. <a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p3204.pdf">http://www.irs.gov/pub/irs-pdf/p3204.pdf</a>

In TurboTax, Enter at:
- Federal Taxes tab
 - Wages & Income
Scroll down to
  -1099-Misc and Other common Income
      - Income From 1099-Misc
 On the  follow up screen,  enter SPIFF (or Manufacturer's incentive payment)  in the blank box, then on the next screen,  on the drop down list, check “This was  a Manufacturer's incentive payment”
This will put it on line 8 of schedule 1 (2019) or line 21 of Schedule 1 (2018) (line 21 of form 1040 prior to 2018).
Describing the income as manufacturer's incentive ion line 21, of form 1040, will also reduce the chance of an IRS inquiry.

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New Member

Received 1099-misc box 7 (&gt;$600) from gift cards issued to me. Can I report income only to line 21 Form 1040 or do I need to file schedule SE? I am not self-employed.

This was really helpful and you were very fast in responses. Yes it basically a spiff!
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