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?

--
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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

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

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"Richard Di Bernardo, CPA" wrote in message news:[email protected]...

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

Just to put a footnote on this, I didn't realize when I posted this that the IRS actually addresses this issue on the back of the 1099-NEC form. It
states very clearly within the instructions:

"If you are not an employee but the amount in this box is not
self-employment (SE) income (for example, it is income from a sporadic
activity or a hobby), report this amount on the “Other income” line (on Schedule 1 (Form 1040))."

--

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

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