1099-NEC received for medical research study

[Patrese415]

North Carolina

I participated in a medical research study for RSV in 2022. I am familiar with 1099's and was expecting a 1099-MISC. I received a 1099-NEC. When entering information from the 1099-NEC into my tax program, it is generating self-employment taxes are on monies.

I am not an independent contractor. I didn't provide a service other than giving blood, taking my temperature, and attending their required appointments.

Specific info on this topic is vague on the internet. Shouldn't I have gotten a 1099-MISC and not have to pay self-employment taxes?

 

[Zigner]

North Carolina

I participated in a medical research study for RSV in 2022. I am familiar with 1099's and was expecting a 1099-MISC. I received a 1099-NEC. When entering information from the 1099-NEC into my tax program, it is generating self-employment taxes are on monies.

I am not an independent contractor. I didn't provide a service other than giving blood, taking my temperature, and attending their required appointments.

Specific info on this topic is vague on the internet. Shouldn't I have gotten a 1099-MISC and not have to pay self-employment taxes?

Nope - here is a writeup that will help explain:

https://turbotax.intuit.com/tax-tips/irs-tax-forms/what-is-form-1099-nec/L5fbwIFSn

(Of course, that is not an endorsement of Intuit or Turbotax, it's given for reference.)

 

[davew9128]

Nope - here is a writeup that will help explain:

https://turbotax.intuit.com/tax-tips/irs-tax-forms/what-is-form-1099-nec/L5fbwIFSn

You're operating from the false presumption that the 1099 is correct. I agree with OP that it is not, and would prepare the return accordingly as not being subject to SE tax.

 

[Zigner]

You're operating from the false presumption that the 1099 is correct. I agree with OP that it is not, and would prepare the return accordingly as not being subject to SE tax.

I'm sorry, I was responding to only one part of the two part question, specifically, "Shouldn't I have gotten a 1099-MISC..."
Taxability of any income is always dependent on the circumstances of the taxpayer.

 

[davew9128]

I'm sorry, I was responding to only one part of the two part question, specifically, "Shouldn't I have gotten a 1099-MISC..."
Taxability of any income is always dependent on the circumstances of the taxpayer.

Taxability isn't in question here, since it clearly it is taxable income. The question refers to the reporting on the NEC and making that income subject to self-employment tax. I can't think of an instance where this is business income based on these facts. The 1099 isn't controlling anyway, which is why I indicated I would prepare the return accordingly.

 

[Zigner]

Taxability isn't in question here, since it clearly it is taxable income. The question refers to the reporting on the NEC and making that income subject to self-employment tax. I can't think of an instance where this is business income based on these facts. The 1099 isn't controlling anyway, which is why I indicated I would prepare the return accordingly.

Why do you feel that Form 1099-NEC isn't appropriate?

From the IRS instructions for form 1099-NEC (https://www.irs.gov/Form1099nec):

Specific Instructions for Form 1099-NEC
File Form 1099-NEC, Nonemployee Compensation, for each person in the course of your business to whom you have paid the following during the year.

• At least $600 in:

1. Services performed by someone who is not your employee (including parts and materials) (box 1); or
2. Payments to an attorney (box 1). (See Payments to attorneys, later.)

While it's obvious that #2 doesn't apply, #1 certainly does seem to apply.

 

[davew9128]

Why do you feel that Form 1099-NEC isn't appropriate?

From the IRS instructions for form 1099-NEC (https://www.irs.gov/Form1099nec):

Specific Instructions for Form 1099-NEC
File Form 1099-NEC, Nonemployee Compensation, for each person in the course of your business to whom you have paid the following during the year.

• At least $600 in:

1. Services performed by someone who is not your employee (including parts and materials) (box 1); or
2. Payments to an attorney (box 1). (See Payments to attorneys, later.)

While it's obvious that #2 doesn't apply, #1 certainly does seem to apply.

What services are being provided? OP is not in the trade or business of being a medical research subject.

 

[Zigner]

What services are being provided? OP is not in the trade or business of being a medical research subject.

He provided the service of being a medical research subject. He doesn't have to be in that trade or business.

 

[Patrese415]

From the TT website.

1099-MISC unrelated to self-employment
A non-work 1099-MISC would be for things like:

• Prize money
• Lawsuit settlements
• Research studies
• Other

If I enter the monies reported as a 1099-MISC it clearly asks about medical studies and does not throw it on a Sch. C and subject it to self-employment tax.

I am not self-employed by participating in medical, cat food, nicotine, or frozen food research studies. Guess someone could be if they were on enough mailing lists and qualified in enough studies.

I am contacting the issuer.

 

[Zigner]

From the TT website.

1099-MISC unrelated to self-employment
A non-work 1099-MISC would be for things like:

• Prize money
• Lawsuit settlements
• Research studies
• Other

If I enter the monies reported as a 1099-MISC it clearly asks about medical studies and does not throw it on a Sch. C and subject it to self-employment tax.

I am not self-employed by participating in medical, cat food, nicotine, or frozen food research studies. Guess someone could be if they were on enough mailing lists and qualified in enough studies.

I am contacting the issuer.

Fair enough.

 

[davew9128]

He provided the service of being a medical research subject. He doesn't have to be in that trade or business.

That's not a service and yes it needs to rise to the level of a trade or business to be subject to SE tax. The issuer was wrong.

 

[Zigner]

That's not a service and yes it needs to rise to the level of a trade or business to be subject to SE tax. The issuer was wrong.

The payor doesn't determine if it is subject to SE tax.

 

[Patrese415]

The payor doesn't determine if it is subject to SE tax.

No the payer doesn't determine that. The payer does have the responsibility to issue the correct 1099.

 

[Zigner]

No the payer doesn't determine that. The payer does have the responsibility to issue the correct 1099.

I don't believe that you were (necessarily) issued the incorrect form. In any case, if you received a Form 1099-NEC and the payment is not considered taxable income to you, then you aren't going to have to pay tax on it. In other words, tomato-tomato.

 

[cbg]

@Taxing Matters