Will you pay more taxes with checking BOX 7 non-employee compensation or by checking BOX 3 as other income? Ok, its not hard I just wanted to bring in someone who can rightfully answer.
2007-03-02 10:24:40 · 5 answers · asked by Bri up 1 in Business & Finance ➔ Taxes ➔ United States
Generally, amounts reportable in box 7 are subject to self-employment tax. If payments to individuals are not subject to this tax and are not reportable elsewhere on Form 1099-MISC, report the payments in box 3.
Box 7. Nonemployee Compensation
Enter nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee, and fish purchases for cash. Include oil and gas payments for a working interest, whether or not services are performed. Also include expenses incurred for the use of an entertainment facility that you treat as compensation to a nonemployee. Federal executive agencies that make payments to vendors for services, including payments to corporations, must report the payments in this box. See Rev. Rul. 2003-66, which is on page 1115 of Internal Revenue Bulletin 2003-26 at www.irs.gov/pub/irs-irbs/irb03-26.pdf.
2007-03-02 12:53:55 · answer #1 · answered by tma 6 · 0⤊ 1⤋
Well, you can't just pick which box it goes in. Items that go in Box 3 are things like prizes or winnings. Those go on Line 21 of your 1040 form. Non employee compensation would be like if you worked for someone and they didn't withhold taxes. Example: Construction, bonuses for car salesmen, etc. Anything that was earned income should be in Box 7. For non employee comp, you are treated as if you are self employed. You must pay self employment tax on that income. You'll have to file a Schedule C. You could also take any expenses, if any, that you incurred on the job.
2007-03-02 13:59:25 · answer #2 · answered by Fool in the Rain 6 · 0⤊ 2⤋
If you check a box other than the box designated on the 1099 you are basically commiting fraud. That said if it is box 3 it is claimed on line 21 of the form 1040 subject only to Federal Income Tax.
If it is box 7 then it appears on line 12 and it subject to Federal Income Tax, but it also appears on the Schedule SE and C/Cez subject to Social Security and Medicare Tax.
See instructions to Form 1040
2007-03-02 11:16:55 · answer #3 · answered by Rob 7 · 2⤊ 1⤋
You don't just get to choose - the box the income goes in depends on what type of income it is. The non-employee compensation is for income that is subject to self-employment tax - "other income" generally isn't.
2007-03-03 10:25:49 · answer #4 · answered by Judy 7 · 0⤊ 1⤋
As far as I know, regardless of what box you check it all adds to your total income, and in the end the figure that is ultimately taxed is derived from your total income. It might help to indicate what form you are filing.
2007-03-02 10:40:09 · answer #5 · answered by Roman 2 · 0⤊ 1⤋