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?
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.
Richard J. Di Bernardo, CPA MST
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