Category: Questions about Income
I did not own a business. Why do I have to report my 1099-MISC on a Schedule C?
When you earn money by performing work, that income is usually subject to social security and Medicare taxes. Usually, when you work for a company, you are their employee. As their employee, you only have to pay half of these taxes while your employer pays the other half.
If you received a 1099-MISC with the amount of the income in Box 7, Nonemployee Compensation, the person or company who issued the form did not consider you an employee*. Because of this, they did not withhold any of your applicable social security or Medicare taxes. When this is the case, you generally will have to pay the full amount of these taxes (rather than just half) and include this on your federal income tax return. Unfortunately, there is usually no way around this.
You have to complete a Schedule C for this income because of these additional taxes (called self-employment taxes for short). When you report the income on a Schedule C, TaxSlayer will automatically calculate your self-employment taxes for you. To complete a Schedule C within the TaxSlayer program, go to Federal Section >> Enter Myself >> Profit or Loss From a Business.
If your 1099-MISC did not have an amount in box 7, please refer to How do I report my 1099-MISC in my TaxSlayer Account?
Incorrectly reporting this income: If you were to just report the income as "Other Income", these additional taxes would not calculate correctly. When the IRS reviewed your return later in the year, they would find that you did not report this correctly and you would have to not only pay the self-employment taxes, but you would end up owing penalties and interest.
*If you believe you are an employee of the person or company that issued you the Form 1099-MISC, you would need to contact them directly to get this corrected.