Tax Year Prior to 2020: 1099-Misc

[warthpeggy]

 My husband has a 1099-Misc (a bonus for selling a specific product). This 1099 is from the company that makes the product. This bonus is earned during the course of my husband's regular job. When I put this 1099-Misc info into Turbo Tax, it assumes he has his own business, which is not the case. Turbo Tax  wants to fill out a schedule C on my husband. How can we enter this info correctly?  

[TomK100]

You can report it as other income on Form 1040 line 21. Here's how to enter it in TurboTax.

1. Click the Federal Taxes tab (Personal in the Home & Business version)
2. Click Wages & Income. (Personal income in the H & B version)
3. Click "I'll choose what I work on."
4. On the screen "Your 2019 Income Summary," scroll all the way down to the last section, "Less Common Income."
5. Click the Start or Update button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."
6. 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."
7. The next screen asks, "Did you receive any other taxable income." Click Yes.
8. On the next screen, "Other Taxable Income," enter a description and the amount. Click Continue.
9. On the next screen click Done.

The income will be reported on Form 1040 line 21 with the description that you entered.

[Pfieff]

TomK100, will this raise any flags because the income came on a 1099-MISC?  I am in a similar situation and when I originally put the income in under the 1099-MISC section compared to where you suggested my return amount changed?

[WKins2]

Since this is not income from a business, you would report this under other income in the program, which is under miscellaneous income.

To get there follow these steps:

1. Login to your account

2. On the left side of the screen, click Tax Tools

3. Click Tools

4. Click Topic Search, type in 'other income', hit your enter button

5. Follow the prompts

[jminyard]

This specifically says "Do not enter income reported on 1099-Misc". ??????

[ColeenD3]

@jminyard

Yes, that is to prevent taxpayers from entering their self-employment income there. In most cases, you would not enter the income there. There are exceptions, however.

[jminyard]

Then why is TomK100 saying it can be entered there, even though it's on a 1099-Misc????

[ColeenD3]

Let's start over. This is a thread that you have tagged onto at the end. The initial poster stated that they were currently working for the same employer that gave them the 1099-Misc.

You also have another post in another thread. You are not an employee and have not been one in the past. 

Enter nonemployee compensation (NEC) of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee. IRS 1099-MIsc.

You are a non-employee. Include your income on Schedule C.

[jminyard]

Does that mean I will have to pay self-employment tax?

[ColeenD3]

Yes, but it also means you can take expenses. 

[jminyard]

No expenses since this is income from sales made more than 10 years ago.  Just doesn't seem fair that I would be considered a business for this!

[VolvoGirl]

You only pay self employment tax on the Net Profit on Schedule C.  Which is the Gross income minus your expenses.

 Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.   

[pk]

@Pfieff @warthpeggy @jminyard , I agree with the answer  by @WKins2  ONLY if the amount is shown on the 1099-MISC as  "other income " in Box 3.   In any other box , it needs to be handled  per the category shown --- the AUR system   ( Automatic Under-Reporter )  compares incomes by category.   Need to be sure that this is indeed 'Other"  income . Note that Non-Employee  income is subject to SECA taxes ( 15.3%  of 92 % of the net  income  ) Schedule-C and Schedule-SE

See below -->

https://www.irs.gov/faqs/interest-dividends-other-types-of-income/1099-misc-independent-contractors-...

[jminyard]

The amount is shown in Box 7.

[pk]

Box 7 earnings are reported on Schedule--C and also subject to  SECA  ( called FICA for wage earners just at double rate   ).  TurboTax will normally handle this  -- ask for a business name , category etc. -- treat this like self-employed.