1099-NEC received for medical research study

[Patrese415]

If any readers search for a credible answer, this is from the IRS website. I'll be using this to request a corrected 1099 be issued.

Instructions for Forms
1099-MISC and 1099-NEC
(Rev. January 2022)
Miscellaneous Information and Nonemployee Compensation

Page 5 -

Box 3. Other Income
Enter other income of $600 or more required to be reported
on Form 1099-MISC that is not reportable in one of the other
boxes on the form.

Other items required to be reported in box 3 include the
following.
1. Payments as explained earlier under Deceased
employee's wages.
2. Payments as explained earlier under Indian gaming
profits, payments to tribal members.
3. A payment or series of payments made to individuals
for participating in a medical research study or studies.

 

[Patrese415]

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.

If you use TT, there is no way to report the 1099-NEC in the program and NOT pay self employment tax on it.

 

[Zigner]

I will concede that Form 1099-MISC is the correct form that should be issued in this situation.

 

[davew9128]

If you use TT, there is no way to report the 1099-NEC in the program and NOT pay self employment tax on it.

Sure there is. It's called knowing how to prepare a return properly and not blindly rely on the software to take your input and do the work. Tax professionals call this "critical thinking".

 

[Patrese415]

Sure there is. It's called knowing how to prepare a return properly and not blindly rely on the software to take your input and do the work. Tax professionals call this "critical thinking".

TT previously allowed you to look at, and adjust, the tax forms before filing. I used it all the time when I had to file a Sch C. They don't give you, or I can't find, that option anymore.

Seems my critical thinking, and knowing a little about self-employment tax brought me here to ask the question in the first place. 1099-NEC came out last year. I'd file paper, but don't want to wait 3 months for my small refund.

 

[davew9128]

TT previously allowed you to look at, and adjust, the tax forms before filing. I used it all the time when I had to file a Sch C. They don't give you, or I can't find, that option anymore.

You're preparing the return based on form document input. I don't profess to know how TT works, and honestly don't care (though they always seem to be an excellent after the fact referral source for amended returns...). Since you seem to understand the return process, why would you input into software differently than you would by hand?

 

[Patrese415]

You're preparing the return based on form document input. I don't profess to know how TT works, and honestly don't care (though they always seem to be an excellent after the fact referral source for amended returns...). Since you seem to understand the return process, why would you input into software differently than you would by hand?

TT has separate entry input's for 1099-NEC and 1099-MISC. 1099-NEC goes straight to self employment income and does not allow any way to override it. There are no options to change it.

 

[LdiJ]

TT previously allowed you to look at, and adjust, the tax forms before filing. I used it all the time when I had to file a Sch C. They don't give you, or I can't find, that option anymore.

Seems my critical thinking, and knowing a little about self-employment tax brought me here to ask the question in the first place. 1099-NEC came out last year. I'd file paper, but don't want to wait 3 months for my small refund.

Here is the thing. A tax professional would not be data entering the 1099 NEC into the software in this instance. A tax professional would simply go put the income where it goes on the 1040. Of course, professional software allows us to do that, but I bet that TT would allow for that as well. There is probably a spot where you can manually enter a number as "other income" without using a document.

You should see if you can find that spot, and then delete the 1099 NEC and put the income in the "other income" spot.

 

[davew9128]

TT has separate entry input's for 1099-NEC and 1099-MISC. 1099-NEC goes straight to self employment income and does not allow any way to override it. There are no options to change it.

Again, this is where you prepare the return based on the application of law rather than forms input. If you believe it wasn't properly reported on the form, why would you then prepare the return using that form's input screen? Sorry, this is a pet peeve of mine that I drill into junior professionals who don't do any critical thinking about what they're actually doing. Nothing to do with you specifically.

 

[Taxing Matters]

@Taxing Matters

I agree with the OP and davew9128 that this income is not self-employment income. The OP is not in the regular business of being a medical test subject, and the OP's most recent post quoting the 1099 instructions is what I would have linked to for support of that position. You can get the right result in Turbo Tax, as Ldij explained. I think the thread has throughly covered the subject so have nothing more to add.