I received a 1099-MISC - now what?
People can receive Form 1099-MISC for a variety of reasons but the most common one is because you worked as a “non-employee” for a company.
Employee or Non-Employee?
Most people receive a Form W-2 when they work for a company.
But, if you are not an employee and do some work for a company then you will likely receive a 1099-MISC instead of a W-2.
These non-employees are often referred to as “contractors.”
Form 1099-MISC documents for contractors and the IRS how much they were paid and who paid the money.
Do I Own a Business?
If you receive a Form 1099-MISC and it’s because you were working for a company, then, in the eyes of the IRS, you own a business and are self employed.
What Forms Do I Have To File?
Business owners, even part-time ones, file Schedule C of Form 1040 to document their business income and expenses.
If you have a loss (business expenses greater than business income) then it might reduce the amount of tax you owe on other income such as from being an employee or interest income.
If you have a gain (business income greater than business expenses) then you might need to pay income tax and self employment taxes on this income.
Schedule SE is used to calculate your self-employment tax. Self employment tax consists of Medicare and Social Security taxes.
If you worked for a company and received Form 1099-MISC, TurboTax will guide you through the process of completing schedules C and SE.
Other Reasons For Receiving Form 1099-MISC
Form 1099-MISC is used to report various types of income. Some examples include:
- Payments of $600 or more for services performed for a trade or business by people not treated as its employees (such as subcontractors).
- Prizes or awards ($600 or more)
- State and Federal tax withheld in conjunction with any of the other activities reportable on the form.
- Rent payments
- Royalty payments ($10 or more)
- Substitute dividend and tax-exempt interest reportable by brokers ($10 or more).
- Payments to a physician, physicians' corporation or other supplier of health and medical services, issued mainly by medical assistance programs or health and accident insurance plans ($600 or more).
- Payments to fishing boat crew members coming from sale of catch.
- Crop insurance proceeds.
Form 1099-MISC income is entered in different places in TurboTax, depending on the nature of the income. TurboTax will guide you to the correct place for entering each type of income.