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Level 3
posted Mar 6, 2021 7:48:10 AM

Where should I put 1099-NEC income for consulting work? If I put it in Personal, my refund is much higher than if I put it in Business.

I used to run a consulting business full-time until I went back to work for someone else full-time again two years ago.  At that time, I also moved to another state and formally dissolved my business. 

 

In TY 2020, one of my clients from the business hired me again to do work for them each night after my full-time job.  Since it was a one-off project and wasn’t very large, I did this consulting work in my own name and did not re-incorporate my business.  It was enough work for me to need a 1099-NEC, sent to me in my name and with my new address.  (In previous years, this client would send me a 1099-MISC.)  The 1099-NEC would not show any ties to my old business.

 

Because of this project, for TY 2020, I switched from Premier (which I used last year - W-2 income only) back to Home & Business.  H&B has two places to enter a 1099-NEC:

 

  1. Personal —> Personal Income —> Other Common Income —> Income from Form 1099-NEC.
  2. Business —> Business Income and Expenses —> Profit or Loss from Business —> open my consulting business and Edit —> Business Income —> Business Income —> 1099-NEC Income.

 

My refund is significantly lower if I enter this income under Business instead of Personal.  I think it’s due to self-employment tax.  Where should I enter this income, and why?


And if I shouldn't enter it under Personal, why does TurboTax Home & Business make Personal the more obvious place to put 1099-NEC income?

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1 Replies
Expert Alumni
Mar 6, 2021 8:06:14 AM

Form 1099-NEC reports non-employee compensation. It is not personal income, it belongs on Schedule C.

 

The back of the form states this.

 

Box 1. Shows nonemployee compensation. If the amount in this box is SE income, report it on Schedule C or F (Form 1040) if a sole proprietor, or on Form 1065 and Schedule K-1 (Form 1065) if a partnership, and the recipient/partner completes Schedule SE (Form 1040).