Help! 1099-MISC

[Phoenix123]

New Jersey

Hello,

I would like to ask you some questions related to filing a 1099-MISC. I received two monetary awards in 2015 which totaled $15,000. Both awards were issued to me via the same company. I received $5,000 for one award and $10,000 for the other award. Subsequently, I received tax form 1099-MISC in the mail. However, what confuses me is that the 1099-MISC form that I received states the $10,000 award as "Other income" (box 3) and the $5,000 award as "Nonemployee compensation" (box 7). I entered this information on my taxes using tax software (as it appears on the form sent to me), but now the tax software won't let me proceed because it doesn't know what to do with the $5,000 under "Nonemployee compensation".

So my first question is this: Why is the $5,000 award I received considered "Nonemployee compensation" when the $10,000 award I received via the same company is considered "other income"?

Not to bias anyone's response, but I wonder whether or not the 1099-MISC form was marked down correctly. It seems to me that the entire $15,000 should all be considered as either "Other income" or "Nonemployee compensation".

I'm inclined to think that the entire $15,000 should be considered as "Other income" since, from what I can gather, "Other income" includes prizes and awards. So does this mean that the 1099-MISC form that I received made a mistake?

To make matters even more complicated, the company from which I received the two awards had me sign a self-employment waiver in order to receive each award. Does this mean that the $15,000 should be filed as self-employment income? If so, then why did the company send me a 1099-MISC form?

Thank you.

 

[LdiJ]

New Jersey

Hello,

I would like to ask you some questions related to filing a 1099-MISC. I received two monetary awards in 2015 which totaled $15,000. Both awards were issued to me via the same company. I received $5,000 for one award and $10,000 for the other award. Subsequently, I received tax form 1099-MISC in the mail. However, what confuses me is that the 1099-MISC form that I received states the $10,000 award as "Other income" (box 3) and the $5,000 award as "Nonemployee compensation" (box 7). I entered this information on my taxes using tax software (as it appears on the form sent to me), but now the tax software won't let me proceed because it doesn't know what to do with the $5,000 under "Nonemployee compensation".

So my first question is this: Why is the $5,000 award I received considered "Nonemployee compensation" when the $10,000 award I received via the same company is considered "other income"?

Not to bias anyone's response, but I wonder whether or not the 1099-MISC form was marked down correctly. It seems to me that the entire $15,000 should all be considered as either "Other income" or "Nonemployee compensation".

I'm inclined to think that the entire $15,000 should be considered as "Other income" since, from what I can gather, "Other income" includes prizes and awards. So does this mean that the 1099-MISC form that I received made a mistake?

To make matters even more complicated, the company from which I received the two awards had me sign a self-employment waiver in order to receive each award. Does this mean that the $15,000 should be filed as self-employment income? If so, then why did the company send me a 1099-MISC form?

Thank you.

Can you explain the awards more completely? The exact details will matter.

 

[tranquility]

Let me just say, kudos to you for handling difficult situations in a timely manner.

But, there is no way to tell how to report without knowing the underlying facts of the "awards". Did you win a prize? Did you do some act for the company and were the top performer?

Why did the company give you $10,000 and $5,000?

The IRS might expect the $5K should go on schedule C and the $10K to end up either on Line 21 (With or without SE taxes calculated--depending.) or on a Schedule C also.

Without knowing the exact reason you got the money, there is no way for us to tell. Don't talk about what you signed, talk about why you got the money.

 

[justalayman]

While I enjoy tranquility's sarcasm, especially given he is probably neck deep in returns at the moment and the fact he could toss a bit of acerbic humor into his post is amazing, while he discounted what you signed, I am not.

Are you an employee?

The signing of the acknowledgement you are an ic yet you talk as if you consider yourself an employee suggests there may be either a serious issue with a misclassification of your employment status or possibly you recieved compensation as both an employee AND a non-employee. Now with that in mind we get back to tranquility's statement about why you recieved the money rather than what you signed.

Are you an actual employee or are you an IC? Were the two payments for different reasosns where you may have acted as an IC in one situstion but were acting as an employee in the other?

 

[tranquility]

While I enjoy tranquility's sarcasm, especially given he is probably neck deep in returns at the moment

Thanks for the thought. While working today (As I have every day since mid-January), we broke the back of the season about Wednesday. There's still work and next week I start on payroll and other quarterly reporting. However, I will probably eat lunch at home today.

 

[davew128]

I was effectively done Friday except for administrative duties and clean up. Worst and busiest year for me in many.

That said, I encountered a similar 1099 a couple weeks ago. Details to me are sketchy now (i couldn't even remember who it was for) but the 1099 was issued by an MLM company, other income was for the value of sample merchandise given (or something similar) and the non-employee comp was for commissions on product sold. I was satisfied at the time that the 1099 reporting was correct.