Miscellaneous Income Form 1099 Tips & Help

Does it matter which box my income is reported in?

Explanation of some of the boxes on Form 1099 MISC:

Boxes 1 and 2:
Reports rents from real estate on Schedule E (Form 1040). If you provided significant services to the tenant, sold real estate as a business, or rented personal property as a business, then it is shown on Schedule C or C-EZ (Form 1040).

Box 3:
Generally, this amount is shown on the line labeled "Other income" on Form 1040. The amount shown may be payments received as the beneficiary of a deceased employee, prizes, awards, taxable damages, Indian gaming profits, payments made by employers to former employees who are serving in the Armed Forces, the National Guard, or other taxable income. See Pub. 525, Taxable and Nontaxable Income. If it is trade or business income, it is reported on Schedule C, C-EZ, or F (Form 1040).

Box 5:
An amount in this box means the fishing boat operator considers you self-employed. This is shown on Schedule C or C-EZ (Form 1040).

Box 7:
Shows non-employee compensation. If payments in this box are self-employment (SE) income, this amount is reported on Schedule C, C-EZ, or F (Form 1040). You received Form 1099 MISC instead of Form W-2 (W2) because the payer did not consider you an employee and did not withhold income tax or Social Security and Medicare taxes.

Box 8:
Shows substitute payments in lieu of dividends or tax-exempt interest received by your broker on your behalf as a result of a loan of your securities. This amount is shown on the line labeled "Other income" of Form 1040.

Box 9:
If checked, $5,000 or more of sales of consumer products was paid to you on a buy-sell, deposit-commission, or other basis. A dollar amount does not have to be shown. Generally, any income from your sale of these products is shown on Schedule C or C-EZ (Form 1040).

Box 10:
This amount is shown on Line 6 of Schedule F (Form 1040).

Should my Form 1099 MISC income be reported on Schedule C ?

If it's income that isn't subject to self-employment taxes, then it is considered miscellaneous income shown on the line labeled "Other Income" on Form 1040.

If it's for work you did on the side, such as consulting income or any type of income that you received for services you did, then it is shown on Schedule C and requires self-employment taxes to be paid.

What if my income is not self-employment income?

If you have a 1099-MISC that is not self-employment income subject to self-employment taxes, you need to enter the income in Box 3 of the 1099-MISC instead of Box 7. If your income is not self-employment income, you do not need to use Schedule C to report business income. Instead, the 1099-MISC income will go onto Line 21 of the Form 1040 as Other Income that is only subject to regular tax and not subject to self-employment taxes.

However, you should have the payer reissue another 1099-MISC to you and have the amount put in Box 3 of the 1099-MISC as Other Income instead of Box 7 as Nonemployee Compensation. Otherwise the IRS will expect you to report the Box 7 nonemployee compensation on Schedule C or Schedule F and pay self-employment taxes on it.

What if my Box 7 amount is not nonemployee compensation?

Box 7 of the 1099-MISC is for nonemployee compensation that needs to be reported on a Schedule C or Schedule F as business or farm income subject to self-employment taxes. If the income is not nonemployee compensation, you need to have the payer reissue another 1099-MISC to you and have the amount put in Box 3 of the 1099-MISC as Other Income instead of Box 7 as Nonemployee Compensation. Otherwise the IRS will expect you to report the Box 7 nonemployee compensation on Schedule C or Schedule F and pay self-employment taxes on it.

How do I match my 1099-MISC with a Schedule C ?

Create or edit a Business Income (Schedule C) record that the income from the 1099-MISC belongs to. You will go to the Basic Business Information screen and enter the info on that screen. When you click the Save and Continue button on that screen you will go to the Link 1099-MISC Form(s) screen. At the top of the screen will be listed all Form 1099-MISC you have entered that have not yet been assigned to a business. Check any 1099-MISC that is related to that business, and then the 1099-MISC will be tied to that Schedule C business.

If you're filing a joint return with your spouse, make sure that the business owner for the Schedule C on the Basic Business Information screen matches the person who received the 1099-MISC

I am a contractor and do not have a business. How do I enter my 1099-MISC without entering a business?

The IRS considers consulting or contractor income as business income that needs to be entered on a Schedule C. If you have self-employment income from a 1099-MISC which is the case with most Form 1099-MISC, you do need to report the income on Schedule C.

Click on the Business Income (Schedule C) link in the Business Income section of the menu. Add a business record. On the Basic Business Information screen, just enter a short description of the type of work you did for the business description. If you did consulting work, type in something like business consultant or consulting service for the business description. Select the business code that best describes the type of work you are doing. Select "Cash" as the type of accounting method used. All of the other questions usually can be left blank. Then on the next screen, you select the checkbox for the Form 1099-MISC income that relates to the Schedule C. The next screens will ask for business expenses, but if you do not have any, you can just keep going through those screens without entering anything. Your 1099-MISC income will then correctly show up on Schedule C and be subject to the self-employment taxes.

Do I have to enter a 1099-MISC record?

The 1099-MISC record is not e-filed to the IRS like a W-2 (W2) is. The 1099-MISC screen helps identify whether the income shown on the 1099-MISC should go onto a Schedule C, Schedule E, Schedule F or as Other Income on Line 21 of Form 1040. It then flows the 1099-MISC income to the correct form.

If you know where the income should be reported and you do not have any federal tax withheld shown on the 1099-MISC, you could choose to skip entering the 1099-MISC and just enter the income directly on a Schedule C record, Royalty record, Rental record, Farm Income record, or as Other Income on the on the Other Income screen in the Uncommon Income section. If you do enter the income directly on one of those records, make sure you don't have it entered as a 1099-MISC also, if you do that then the income will be doubled on your Schedule C, etc.

I have a 1099-MISC with Box 7 nonemployee compensation. I don't have a business, why do I have to do a Schedule C ?

Nonemployee compensation on a 1099-MISC is self-employment income and needs to usually be reported on Schedule C (or Schedule F if it is farm income) even if you are just doing a little bit of work on the side and do not have an official business. The IRS considers any income reported in Box 7 of the 1099-MISC as self-employment income and looks for it to be reported on either Schedule C or F.

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