TurboTax is not correctly treating 1099-NEC income that is earned but not self-employment.

Forum|Forum|2 years ago
March 11, 2024
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TurboTax is not correctly treating 1099-NEC income that is earned but not self-employment. If I enter 1099-NEC information under “Other Common Income” and then select “sporadic or hobby income” the income is automatically treated as unearned if more than $2,500, which then forces me to complete Form 8615 (Tax for Certain Children Who Have Unearned Income ).

SusanY1

If it's earned income, then it is going to have to be treated as self-employment income for the most part.

Can you tell us a little bit more about why you feel it shouldn't be self-employment income, yet it also shouldn't be unearned? Generally, if not treated as self-employment income, it has to be "unearned". It can't really be both earned income and excluded from self-employment tax, usually. If it's earned income, then it's subject to SE tax with limited exceptions.

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AvaNicastroAuthor

It was a one-time, volunteer, unpaid internship program that offered a fixed honorarium to help defray the costs of participation and to minimize the sacrifice necessary in participating in the program. Thus, it is earned income from a sporatic activity, not self-employment income.

However, I'm not really seeking an opinion on how to treat this income for tax purposes. I would like to know how to use TurboTax to report this 1099-NEC income as earned, not self-employment income on line 8 of the 1040. As you said, there are limited exceptions. So, I don't beleive TurboTax should be excluding the ability to apply these limited exceptions.