Question

Misc 1099 NEC

Forum|Forum|3 years ago
February 20, 2023
1 reply
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I was a student from Jan until I graduated in May. During this time, I worked for the University. They provided me with an office, assigned me jobs, deadlines and required so many hours a week. They called this stipend income and issued a 1099NEC. I had no other job during this time and did not own a business or have any business deductions. Can I report this as other income and not do a schedule C and not pay self-employment taxes?

M

MonikaK1

The university has treated you as an independent contractor by issuing you a Form 1099-NEC. You should report the income and any allowable expenses on Schedule C. TurboTax would then calculate self-employment tax on any net profit of $400 or more. The self-employment tax would add to your Social Security account for your future retirement. The IRS information return matching program will look for the Form 1099-NEC to be reported on a tax return.

See this article and this IRS webpage for more information on this topic.

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K

Kathy789Author

Thanks for the information but I don't understand why I am considered a contract labor person when I don't own a business and had no job that this worked was related too. Also they provided the workplace, told me what to do and determined my hours. Thanks for your help.

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GeorgeM777

If the University provided your workplace and told you what to do (and if they told you how to do the work), then you likely were their employee rather than a non-employee. For the IRS, employee versus non-employee is predicated on the issue of control. The more you are controlled, the greater the likelihood that you are an employee.

However, you have to work with what you have, which for you is a 1099-NEC. The IRS has provided guidance on the issue you are facing and for your convenience it has been reproduced below. Review the third bullet point because that bullet point seems to address your specific question/issue.

If you weren't an employee of the payer, where you report the income depends on whether your activity is a trade or business. You're in a self-employed trade or business if your primary purpose is to make a profit and your activity is regular and continuous.

If you're in a self-employed trade or business, you must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship). If you're self-employed, you'll also need to complete Schedule SE (Form 1040), Self-Employment Tax and pay self-employment tax on your net earnings from self-employment of $400 or more.
There's no withholding of tax from self-employment income. As a self-employed individual, you may need to make estimated tax payments during the year to cover your tax liabilities. Refer to Form 1040-ES, Estimated Tax for Individuals for more details on who must pay estimated tax.

If you're not an employee of the payer, and you're not in a self-employed trade or business, you should report the income on line 8j of Schedule 1 (Form 1040), Additional Income and Adjustments to IncomePDF and any allowable expenses on Schedule A (Form 1040), Itemized Deductions. Refer to Not for Profit Activities in Chapter 1 of Publication 535, Business Expenses for allowable nonbusiness expenses.

The above information was obtained from the following IRS webpage (see link below). It is in the form of an FAQ where the questioner received a 1099-NEC but believes they are not self-employed and wants to know how to enter their 1099-NEC on their tax return.

W-2 versus a 1099-NEC: How to Report

@Kathy789

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