Google Groups no longer supports new Usenet posts or subscriptions. Historical content remains viewable.
Dismiss
Surprise 1099-NEC
127 views
Skip to first unread message
Rick
Jan 31, 2023, 7:28:32 PM1/31/23
to
Taxpayer received an unexpected 1099-NEC for $1250 for filling out surveys
and responding to questions on the User Interviews website. Taxpayer
considers this to be a hobby or pastime and does not consider it a business
or any form of self-employment. In the past, he would have received a
1099-MISC and simply reported this as "Other Income". Because this is now
sent out as a 1099-NEC instead of a 1099-MISC, will the IRS presume this is
for self-employment income and require payment of self-employment tax? Can
he basically treat this as a 1099-MISC and report it as "Other Income" as he
did in the past?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
and responding to questions on the User Interviews website. Taxpayer
considers this to be a hobby or pastime and does not consider it a business
or any form of self-employment. In the past, he would have received a
1099-MISC and simply reported this as "Other Income". Because this is now
sent out as a 1099-NEC instead of a 1099-MISC, will the IRS presume this is
for self-employment income and require payment of self-employment tax? Can
he basically treat this as a 1099-MISC and report it as "Other Income" as he
did in the past?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Richard Di Bernardo, CPA
Feb 1, 2023, 3:24:29 AM2/1/23
to
On Tuesday, January 31, 2023 at 4:28:32 PM UTC-8, Rick wrote:
> Taxpayer received an unexpected 1099-NEC for $1250 for filling out surveys
> and responding to questions on the User Interviews website. Taxpayer
> considers this to be a hobby or pastime and does not consider it a business
> or any form of self-employment. In the past, he would have received a
> 1099-MISC and simply reported this as "Other Income". Because this is now
> sent out as a 1099-NEC instead of a 1099-MISC, will the IRS presume this is
> for self-employment income and require payment of self-employment tax? Can
> he basically treat this as a 1099-MISC and report it as "Other Income" as he
> did in the past?
I don't understand all of this excitement and overreaction to Forms 1099. They don't necessarily determine taxable income and are obviously silent regarding related factual determinations. TBOR II allows a taxpayer with a reasonable basis to challenge the accuracy of a Form 1099. With the factual determination that the activity was not a trade or business, go ahead and report the earnings as other income. If the IRS sends a CP2000, respond appropriately by explaining the income was reported on the taxpayer's return as "other income," and since it was not received from a trade or business, it is not subject to SE tax. The only way the IRS could "require" payment of SE tax is to issue a 90-day letter (Statutory Notice of Deficiency) and have it run its course in their favor. A notice for a 1099 mismatch is not an assessment. It's just the IRS'a proposal or invitation to discuss what may appear to be an underreporting. You can set them straight.
> Taxpayer received an unexpected 1099-NEC for $1250 for filling out surveys
> and responding to questions on the User Interviews website. Taxpayer
> considers this to be a hobby or pastime and does not consider it a business
> or any form of self-employment. In the past, he would have received a
> 1099-MISC and simply reported this as "Other Income". Because this is now
> sent out as a 1099-NEC instead of a 1099-MISC, will the IRS presume this is
> for self-employment income and require payment of self-employment tax? Can
> he basically treat this as a 1099-MISC and report it as "Other Income" as he
> did in the past?
Richard J. Di Bernardo, CPA MST
Rick
Feb 17, 2023, 11:02:28 AM2/17/23
to
"Richard Di Bernardo, CPA" wrote in message
news:6cccebdc-4516-46c0...@googlegroups.com...
Just to put a footnote on this, I didn't realize when I posted this that the
IRS actually addresses this issue on the back of the 1099-NEC form. It
states very clearly within the instructions:
"If you are not an employee but the amount in this box is not
self-employment (SE) income (for example, it is income from a sporadic
activity or a hobby), report this amount on the “Other income” line (on
Schedule 1 (Form 1040))."
--
news:6cccebdc-4516-46c0...@googlegroups.com...
IRS actually addresses this issue on the back of the 1099-NEC form. It
states very clearly within the instructions:
"If you are not an employee but the amount in this box is not
self-employment (SE) income (for example, it is income from a sporadic
activity or a hobby), report this amount on the “Other income” line (on
Schedule 1 (Form 1040))."
--
0 new messages