Why does TT assume that IF you have one 1099-NEC, that you own/run a business?

[parsons-gh]

I have skipped adding the Business address (this was paid from a church as a gift). It hasn't caused any problems with the IRS (so far).

[Opus 17]

Real gifts are never taxable.  Why did the church pay money to you, did you perform any services for the money, and why did they feel the need to issue a 1099 of any kind, and a 1099-NEC specifically?

[parsons-gh]

They are if you are in ministry (a minister, etc.). It is from a Christmas offering for those working around the world.

Assuming a 1099-NEC is the correct form (which I believe it is), does that form automatically make TT think I have a business?? (IF I were a contractor, it would be a normal 1099.)

[Opus 17]

If you are a clergy member of the church, then any money the church directly pays to you is considered part of your wages and should be reported in box 1 of your W-2.  Your employer can't give you tax-free gifts, it's just not allowed, even for clergy.  Tell the church they need to cancel the 1099-NEC and issue a corrected W-2.

If you are not a regular employee of the church, you might be a self-employed missionary.  The income is still taxable and a 1099-NEC is appropriate.

The way to receive a tax-free gift is to have it come directly from the parishioners or church members into your pocket, and not through the church.  (However, those gifts will not be tax deductible to the giver, since personal gifts are never tax deductible.)  Once the church gets involved and it goes through their bank account, it is wages.  

[parsons-gh]

I understand what you outline here. However, I forgot to mention that this church does NOT employ me. I get no other tax form from them. 

[Opus 17]

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@parsons-gh wrote:

I understand what you outline here. However, I forgot to mention that this church does NOT employ me. I get no other tax form from them. 

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Then it's still unclear how and why you got the money.  If I showed up at a random church and said "give me money, which I will distribute to other religious workers around the world", I would expect them to do a background check at the very least, find out what ministries I was involved with, proof that I would be a good steward of the money, and so on.  (More likely they would shut the door in my face or call the fraud unit of the local cops to check me out.)

So you must have some connection with this church, or some recognized ministry, or some other way of persuading them that you would be a good steward of these funds.  What is that, exactly?

[parsons-gh]

Yes, I have a connection. It is the church I attend when not traveling. They send regular gifts to the non-profit I work for, which some to me through a process.

the Christmas gifts they handle differently.

BUT my real question is about the 1099-NET... (I've see other income similar to this, though not a "gift" (perhaps that is the wrong word?).

It seems to me that if the church is correct, then TT needs to let you check a box that says, "this was a gift" (or some such language) and it not compensation for work performed.

[Opus 17]

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@parsons-gh wrote:

Yes, I have a connection. It is the church I attend when not traveling. They send regular gifts to the non-profit I work for, which some to me through a process.

the Christmas gifts they handle differently.

BUT my real question is about the 1099-NET... (I've see other income similar to this, though not a "gift" (perhaps that is the wrong word?).

It seems to me that if the church is correct, then TT needs to let you check a box that says, "this was a gift" (or some such language) and it not compensation for work performed.

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The church has a requirement to issue a 1099 of some type if they pay more than $600 (in most cases).  If the money is not "compensation" for some work or service you performed for the church, they should have issued a 1099-MISC instead of a 1099-NEC.  It's up to the recipient to determine if it is taxable income and how to report it.  

As to why Turbotax assumes that 1099-NEC is from self-employment, it's because that's the IRS instruction.  

I still don't feel I have enough information to know if this is taxable income to you, or not.   I think it is more likely that this is not taxable income at all, if it is really a pass-through to your organization.  But it would be far better for the church to pay the non-profit directly.

To report this as "other" or miscellaneous income, you can enter the 1099-NEC but answer all the test questions NO (not like your main job, not for profit motive, etc.).  That should take care of it.  Then, if you determine this is not taxable to you, you can enter another item of miscellaneous income with a minus sign (negative number) to offset the income and cancel it out.  Keep records for at least 3 years in case the IRS asks questions. 

[parsons-gh]

I figured it out finally. When entering the 1099 NEC, there is an extra screen in TT (App) where you have several options which TT says are rare. the one that worked was (not, Greg has a farm, or other there but:)

"This is not money earned as an employee of self-employed individual, it is form sporadic activity or hobby..."

That "deleted" the Schedule C (and all the questions that go with that). And it actually increased my Refund a bit! 🙂  I think it made it basically fit under "Other Income."

THANKS for your help.