1099 NEC income for the Federal and CA state return

Forum|Forum|2 years ago
February 15, 2024
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Hi.

I'm not a contractor, but I received a 1099 NEC form from my employer.

For the federal return, am I eligible to use a qualified business income (OBI)?

CA return- Am I required to be treated as an employee for California purposes even though I received a 1099-NEC form for federal purposes? Do I need to adjust the amount of my income from the 1099 form and deductible part of my self-employed tax?

Thank you.

Best answer by MccTax 2023

Thank you for your reply. For the federal return, am I eligible to use a qualified business income (OBI), if I have a 1099 NEC income?

CA return- I thought a person who received a 1099 NEC form, would be different to file for California tax return purposes. So, I thought I needed to adjust the amount of my income from the 1099 form and deduct part of my self-employed tax.

RobertB4444

First, if you are an employee then you should be being paid on a W2 and not a 1099-NEC. That form is for self-employed contractors doing work for a business, not for employees. If you are considered an employee by your business you may want to consult your company to find why they are paying you the way that they are.

Second, the schedule C generated by your 1099 as well as any other income or expenses that you have entered into your tax return will transfer over to the California return as well. As long as you have entered them properly then you won't need to make any adjusting entries.

@MccTax 2023

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MccTax 2023AuthorAnswer

Thank you for your reply. For the federal return, am I eligible to use a qualified business income (OBI), if I have a 1099 NEC income?

DawnC

Employee

Yes, business income qualifies for the QBI deduction. Enter it in the federal section as business/self-employment income. TurboTax will generate a Schedule C (for the IRS and CA) and you will be able to deduct your expenses. TurboTax will automatically deduct your QBI and half of your SE tax.

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