1099 NEC reporting

Forum|Forum|3 years ago
February 21, 2023
3 replies
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I am a sheriff deputy and work extra security that is assigned by my dept. It also must be approved as I go to the extra jobs in my uniform as a representative of my dept. I am not self employed or a contractor so should not have to pay self employment tax. Only income tax should be applicable. I receive W2's for my regular duty work. Only Medicare, Income Tax and Retirement is withheld. I received a 1099NEC for the extra job. So, how do I report this income? And where in TurboTax?

Opus 17

Employee

Sorry, that's self-employment. The fact that it must be approved by your regular employee does not mean you are an employee of the outside firm that hires you.

If you are doing side jobs for outside groups, and you think you should be classified as an employee of those outside groups rather than a contractor, start by reading these documents.

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

To classify your income as employee wages rather than contractor payments, you would need to include form SS-8 with your tax return. You must provide detailed information about the type of work, how your work is controlled or assigned, and how you are paid. You would also file form 8919 to report the uncollected social security and medicare taxes. With form 8919, you would pay 7.65% employment tax instead of 15.3% self-employment tax.

https://www.irs.gov/forms-pubs/about-form-8919

https://www.irs.gov/forms-pubs/about-form-ss-8

You would have to file a separate SS-8 form for each job where you think you are an employee rather than a contractor. You would file one overall form 8919. In Turbotax, when entering the 1099, check the box for "this was wages that should have been on a W-2" and use reason code G "I filed Form SS-8 with the IRS and haven’t received a reply yet."

For SS-8 will start an investigation of you and the company you file against. If the IRS determines you were an employee, the company can face significant penalties. If the IRS determines you were a contractor, you will have to re-file your tax returns and can be subject to interest and late fees on the taxes you owe.

JohnB5677

The IRS does consider you self-employed. You will have to pay income tax and also self-employment tax on that income. If you have expenses that you can deduct you can prepare a schedule C (the self-employed form).

If you do not have expenses to deduct you can post it as1099-NEC income.

On the sidebar

Select Federal
Wages & Income
Select Wages and Salaries, or Revisit
Scroll to Other Common Income
1. Refunds Received for State/Local Tax Returns
2. Form 1099-NEC
3. Form 1099-MISC
4. Form 1099-K
Verify that you do have a 1099-NEC [Yes]

The self-employment tax rate is 15.3%. That rate is the sum of 12.4% for Social Security and 2.9% for Medicare.

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Carl11_2

Employee

I've seen this scenario before. Typical reasoning is, it's not in the sheriff's budget to pay a deputy for work they perform outside of their normal duties as sheriff. The third party requesting the support pays the sheriff's dept, and the sheriff's dept "passes through" that payment to the deputy. (either some or all of the payment). That makes it self-employment income to the deputy that receives it, while keeping "the books" straight for the sheriff's dept.