Form 1099-MISC and Schedule C

[Questionguy101]

Is it a foregone conclusion that if a taxpayer received a Form 1099-MISC with non-employee compensation, he will have to file a Schedule C on it? Are there any very special circumstances that the non-employee compensation has to be reported in other part of the tax return than the Schedule C.

[Kram BergGold]

I can think of one

If the taxpayer is not in a trade or business then you wash the 1099 amount off of Schedule C and report it on Form 1040 line 21.

[JoshinNC]

Per the instructions to Schedule C

When the activity is "sporadic".

[Questionguy101]

When the activity is "sporadic".

So if the taxpayer has been doing it for a period of time, like a few months or even a few weeks, it has to go to Schedule C. Have I interpreted it correctly?

[KBTS]

If you search the forum for this topic, you will come up with dozens of discussions on this issue. I would suggest you read through some of them to help you decide the correct tax treatment. Not being smart, but this topic comes up all the time and you will find all kinds of advice/opinions on how to handle.

[taxea]

It would be helpful to know what he did to get the 1099misc. It may or may not be subject to SE depending on what he did. Was this a one time service or does he periodically perform this service whether to issuer or other person/s?

[ToledoEd]

How about this situation. Client has a 1099 MISC box 7 for Strike benefits. I have not seen this before but there is another client in our office with the same thing. One of them told me that they were told it would help them out for tax purposes. Both have over $9000 on the 1099's. Would it count as a business income or a hobby income?

[DaveO]

How about this situation. Client has a 1099 MISC box 7 for Strike benefits. I have not seen this before but there is another client in our office with the same thing. One of them told me that they were told it would help them out for tax purposes. Both have over $9000 on the 1099's. Would it count as a business income or a hobby income?

That's a new one. It would be hard to argue that they are in the "trade or business" of being on strike. However in some industries it does seem they engage in the activity on a "regular and continous" basis.

[cpahispano]

Strike Benefits - same as unemployment

How about this situation. Client has a 1099 MISC box 7 for Strike benefits. I have not seen this before but there is another client in our office with the same thing. One of them told me that they were told it would help them out for tax purposes. Both have over $9000 on the 1099's. Would it count as a business income or a hobby income?

Strike Benefits go in line 21 and are not subject to SE

[taxea]

Strike Benefits go in line 21 and are not subject to SE

Strike benefits are to support the worker while on strike. Look at it like insurance that the tp pays through his dues. It is not in lieu of wages so I agree with your assessment on this.

[ToledoEd]

We are reporting on Line 21 Other Income. No SE Tax. I have never had a union report benefits this way before and thought that it was unusual.

[Questionguy101]

We are reporting on Line 21 Other Income. No SE Tax. I have never had a union report benefits this way before and thought that it was unusual.

I have always thought non-employee compensation (Form 1099-MISC box 7) by default is considered self-employed income and subject to SE tax.

If it is reported in Form 1040 line 21 with no SE tax, will the taxpayer receive a letter from the IRS later because the benefits have been reported in box 7 as "non-employee compensation" but no Schedule SE is filed and no SE tax is paid?

[taxea]

I have always thought non-employee compensation (Form 1099-MISC box 7) by default is considered self-employed income and subject to SE tax.

If it is reported in Form 1040 line 21 with no SE tax, will the taxpayer receive a letter from the IRS later because the benefits have been reported in box 7 as "non-employee compensation" but no Schedule SE is filed and no SE tax is aid?

None of my clients have received letters. I include a statement that says "TP provided a one time service. Not subject to SE. TP did not engage in this service with regularity or constantly".

[Bill Tubbs]

Hobby income

What is hobby and what is self-employment? I have on occasion put 1099-Misc income on Form 1040 Line 21 (not subject to SE) with the note of "1099-Misc Hobby Income". Haven't had one of these audited yet, but the dollar amounts have been pretty low. One client in particular I believe has been 4 years running, about $1500 of 1099-Misc [some position at her church]. The first year I went over the hobby vs. self-employment checklist and we agreed on hobby.

Bill

[David1980]

I've seen letters when it wasn't included on Schedule C. That said, facts trump forms. If the facts are such that it shouldn't be on Schedule C I wouldn't put it on Schedule C. If the IRS does send a letter, well, you respond to the letter with an explanation. Most of the time it probably does belong on Schedule C so there's a little more fact finding when the taxpayer is giving information that seems to suggest it shouldn't be.