IRS says 1099-misc belongs on Sch C vs. Ln 21 form 1040

[AZ-Tax]

TY 2014 IRS says 1099-misc belongs on Sch C vs. Ln 21 form 1040. Anyone had experience with this before?

Any reason why this tax return cannot be amended for the TP now says he has plenty of Bus related exps?

[DaveinTexas]

Nature?

What was the nature/source of the income? Was this income derived from an activity the taxpayer never seeks to employ themselves in going forward? Was it an award/prize? Was it a scholarship?

See Batok, TC Memo, 1992-727. The courts have ruled that an activity subject to SE tax must be regular and continuous. A TP was not liable for SE tax for doing a one-time window installation job where he had never performed that kind of service before, nor did he ever again at any time thereafter.

[taxea]

OP does not say in which box the income was reported.

[DaveinTexas]

It matters not

which box the monies were reported, this is commonly reported incorrectly anyway. The OP didn't say much of anything for us to draw a conclusion; must be the AZ winds/dust storms breaking up the internet signal.

[AZ-Tax]

Form 1099-misc Box 7 income.

which box the monies were reported, this is commonly reported incorrectly anyway. The OP didn't say much of anything for us to draw a conclusion; must be the AZ winds/dust storms breaking up the internet signal.

I don't know what I was thinking by not including this: Form 1099-misc Box 7 income.

[Rapid Robert]

TY 2014 IRS says 1099-misc belongs on Sch C vs. Ln 21 form 1040.

Any reason why this tax return cannot be amended for the TP now says he has plenty of Bus related exps?

In what form did the IRS "say"? A CP2000 letter? Something else?

As to your second question, I'd say a taxpayer can amend an incorrect return any time they wish to.

[AZ-Tax]

CP2000 Letter

In what form did the IRS "say"? A CP2000 letter? Something else?

As to your second question, I'd say a taxpayer can amend an incorrect return any time they wish to.

CP2000 letter

[Gene V]

CP2000 letter

Did your client pay Social Security tax on the money? My tax program allows me to put the 1099 on line 21 and generates a schedule SE. I do this quite often, mainly because if I do a schedule C, then I have to file couple local city and county tax. I try to avoid this, unless my client really is in business.

[New York Enrolled Agent]

TY 2014 IRS says 1099-misc belongs on Sch C vs. Ln 21 form 1040. Anyone had experience with this before?

Any reason why this tax return cannot be amended for the TP now says he has plenty of Bus related exps?

I'm curious why you put it on line 21 if the client has "plenty of Bus related expenses". I presume you asked questions of the client - what led you to believe this was NOT a Schedule C item? If it wasn't a business then, how is it a business now?

IRS computers routinely assume line 21 income actually belongs on a Schedule C when reported in box 7 of Form 1099.

[FEDUKE404]

Employment income likely

I don't know what I was thinking by not including this: Form 1099-misc Box 7 income.

In most instances, a Box 7 entry on Form 1099-MISC is viewed by the IRS as work income. Which means they will be looking for a companion Schedule SE.

(Unless you can first convince them of the relevance/acceptability of the "one-time" window-installer defense.)

OTOH, a (valid) Box 3 entry on the Form 1099-MISC does not create such problems.

As others have already noted, I am a bit intrigued by how it was first NOT business income but now the same income may be business income along with some expenses. Huh?

FE

[Burke]

Did your client pay Social Security tax on the money? My tax program allows me to put the 1099 on line 21 and generates a schedule SE. I do this quite often, mainly because if I do a schedule C, then I have to file couple local city and county tax. I try to avoid this, unless my client really is in business.

Same here and my software has a drop-down box for 1099MISC in which you indicate whether it goes to C, E, F, or Line 21(SE) or Line 21(No SE.)

[Rapid Robert]

I'm curious why you put it on line 21[...] what led you to believe this was NOT a Schedule C

Not clear whether the person in the first comment (AZ-Tax) prepared the 2014 return. Let's assume for sake of argument it was prepared elsewhere.

[Burke]

And, too, as you mentioned in an earlier post, there is no reason an amended return cannot be processed to add business expenses, or correspond with the IRS re: the CP 2000, attaching a Sche C which shows how it should have been reported. I would venture to guess that no SE was part of the return; hence, the CP2000 which is looking for it.