1099-NEC but not self employed

Forum|Forum|4 years ago
February 1, 2022
3 replies
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My wife is a preschool teaching assistant. The school participated in a program called Iowa Wages which you apply to receive additional compensation. It's meant to be promote people in these jobs. The extra compensation turned out to be about $900 and she just received a 1099-NEC. As I read it, the 1099-NEC reports money as if you own your own business or are a contract worker. It may even require us to make estimated quarterly tax payments. She is not self employed nor an independent contractor. I don't know how to treat this in TurboTax. Any help would be appreciated.

LeonardS

Yes, your wife is required to report the extra compensation on your joint tax return. You will enter the extra compensation of $900 as other income that is not subject to self-employment tax.

To enter the $900 sign in to your TurboTax account if it is not open and follow these steps:

Select Income & Expenses.
Scroll down to Less common income and select show more.
Scroll to the line Miscellaneous Income, 1099-A, 1099-C, and check start.
On the page Let's Work on Any Miscellaneous Income scroll to the line Other reportable income and click start.
On the page Any Other Taxable Income select yes.
On the page, Other Taxable Income enter the description (Extra Compensation) and amount.
Select continue.
Select done on the next page

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john8791Author

That's definitely good news, but why did they issue a 1099-NEC instead of a 1099-MISC?

RobertB4444

@hiply_2022 Different annuities have different structures and different rules. I would start by consulting with the folks who issued the 1099-NEC to be sure that the form wasn't issued in error. Then, if it was not, I am afraid that it seems likely that this annuity requires that you pay self-employment tax on the proceeds you receive.

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Guwei6263

Hi, thanks for your help.
I received 1099-nec. But it is wrong form. I should receive 1099-misc. the reason is that I have a rental property and the Tenant Could not pay the rent. They applied house assistance from the government in Oct 21. Few weeks later a $7000 direct deposit to my bank account.
This year 2022, I received 1099-nec for $7000 in box 1. This is wrong. This amount should be showed in box 1 (rents) of 1099-misc and I should receive 1099-misc to reflect the rental assistance.

what should I do?

JulieS

The Ideal solution would be to contact the payer and get the form reissued as a 1099-MISC.

Regardless of whether your can get the form corrected, this payment was a substitute for rental income and it should be reported as rental income on your tax return.

Here is how to do that in TurboTax:

Select Federal from the left side menu.
Select Wages and Income toward the top left
Scroll down/ expand the list and look for Rentals and Royalties.
Expand that section and find Rental Properties and Royalties (Sch E).
Click Start on the right.
Answer the first question Yes.
Select Rental property on the left, click Continue.
Enter the basic information about your rental, if you haven't already.
When you get the the Income section on the rental schedule, select Cash, checks, Venmo/PayPal, and/or Form 1099-K.
Click Continue.
Enter the amount from the 1099-NEC here and proceed with your rental schedule as normal.

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Guwei6263

Thanks for your quick response.
when I get in rental income section, there are 3 options to choose:
should I choose 1099-misc , then enter 1099-nec box 1 amount into 1099- misc box 1 (rants)?