1099-MISC Non-Employee Comp: Conflict between TurboTax & TaxCut?

Question

I did a small one-time consulting gig last year and received a 1099-MISC Box 7 Non-Empl Comp for $2K. When I did my taxes via TaxCut, it treated this as Misc Income (line 21 Form 1040) as this was a one-time event. TurboTax does not ask this question and created a Sch C with SS and Self_Employ taxes applied.

In perusing the IRS website, it seems to refer to the non-recurring nature being treated as Other Income, but it's not very clear.

I may contact the IRS on this one, but thought I'd throw it out to the Yahoo Answers community for some feedback.

thanks!

Just checked TaxCut again, it provides selection radio buttons to describe the type of activity related to the 1099-MISC. The 1st selection is for Business, the 3rd selection is for "A one-time or sporadic event". This is what I chose and it placed the income on Line 21 of form 1040, not Sch C.

Answer 1

Schedule C & SE.

You must have made a mistake on Tax Cut somewhere. I had no problem with it handling it properly.

Answer 2

You can report it as misc income or on a Schedule C, but either way it is subject to self emloyment tax. The difference is that on Schedule C you can claim any expenses you had regarding the income, mileage, supplies etc. and these expenses will reduce the self employment tax due as well as income tax. If you had no expenses, it is easier to put it as other income, but you have to mark it other income subject to self employment tax.

Answer 3

On http://www.irs.gov/taxtopics/tc426.html, it says "Income reported on Form 1099-MISC (PDF) in Box 7 as non-employee compensation IS NOT included on Form 1040 as other income. Refer to Topic 408 for more information on how to report non-employee compensation."

Use schedule C, or C-EZ if this is your only 1099 or self-employment income.