I sell construction equipment. I received a 1099-NEC for incentive monies received for getting people to finance from the banking institution. This doesn't feel right as I go through Turbo Tax as it asks about accounting methodology, etc. Shouldn't this be treated similar to a manufacturer's incentive on a 1099-MISC? How can I correctly report this on my taxes?
Yes, this may be similar to a manufacture's incentive previously reported on Form 1099-MISC however, Form 1099-NEC is to report income paid to an independent contractor. Form 1099-MISC is no longer used to report this type of income.
You will report the amount on your 1099-NEC on Schedule C Part 1 Line 6.
To enter your 1099-NEC in TurboTax follow these steps:
This TurboTax link Where do I enter Schedule C? has additional information you may find useful.
Thank you. However, I am not an independent contractor. I work for a well-known company that sells construction equipment and the financing institution that we use will issue these incentives. This is just part of my regular job with my primary employer.
Report it as Other Less Common income and then pick the bottom one Miscellaneous. in the description put 1099-NEC for incentive monies. You do not need to pay for self-employed to do this, do not need schedule C.
Per the IRS Instructions for the 1099-NEC amounts entered in Box 1 are subject to Self Employment (SE)Tax and the income is reported on a Schedule C. However, these types of payments are reported as Other Income on Line 8 and are NOT subject to the SE Tax.
You can enter the Form 1099-NEC in the Wages and Income section of TurboTax, then Other Common Income, then Income from Form 1099-NEC. If you don't want the income to be reported as self-employment income, when asked you would need to indicate that the income has not been earned in the prior or future years, is not associated with your main job and there was not a profit motive in receiving it.