I Received Form 1099-MISC… But I Don't Own a Business!

Lots of questions asking what to do when you get Form 1099-MISC… and you don’t own your own business but instead you’re an employee of another company. Yet you get this form; what do you do with it?

The short answer is: if your Form 1099-MISC shows an amount in Box 7 for nonemployee compensation and it’s because you did consulting work or other services for someone, you DO now "have a business!" You’re in the business of consulting, and you have to file Schedule C to report that 1099-MISC income. This is a requirement, not an option!

The good thing about filing Schedule C is the ability to apply any expenses you incurred while performing those services. Think about what you did: did you drive places during the course of the work you did?  Take a mileage deduction. Did you buy computer or office supplies to use during the consulting? Take an office supplies deduction.

The only downside is that you’ll be subject to self-employment tax on your consulting earnings… which is basically the self-employed person’s equivalent of social security and Medicare tax that employers normally withhold from your paychecks. That tax is calculated on Schedule SE, and you’ll see an amount appear on Form 1040, line 58.

Comments (11) Leave your comment

  1. I worked for a nonprofit organization in 2012 and 2013. They hired me, trained me, and paid me $8.00 an hour, but did not take out taxes. I received 1099-misc forms from them, and the amount is listed in nonemployee compensation. I had to learn to use their software and use their assessments. I am disabled and also received non-taxable social security benefits. I am now trying to file my 2012 and 2013 tax returns because I was so confused about what to do. I wasn’t a business. I had to do what they told me to do. How do I file?

  2. I received a 1099-MISC with less than $600 in box 3. My employer told me it was for the company truck they gave me. They pay all the expenses and mileage in lieu of me using my own truck with a truck allowance. So what is this money actually for that I never received. Is it an error or do I report it and where on TurboTax.

  3. I work for a catering business occasionally that sent me a 1099 at the end of the year. I filed a schedule C even though that is the only income I have for that line of work. I’m basically an employee but they don’t want to deal with paying my taxes. Do I also have to get a business license? This is not my business – I don’t recruit customers and only got paid about $2000 in hourly wages.

  4. I disagree with the standard advice given by Turbotax. My husband, an employee, received a 1099-MISC from a company that sponsored a workshop he attended at the request of his employer, and which had reimbursed him for his travel expenses. He is NOT self-employed by any stretch of the imagination! Our accountant handled this by providing a supporting statement for Line 21 of the 1040, other income, showing 1) the income on the 1099, and 2) a second line, subtracting the income, with the explanation “reimbursed expenses.” I’m commenting because perhaps this will help someone else who runs into the same problem.

  5. I am a summer intern at a small design firm, and I got my first paycheck and it had no taxes deducted from it. I was told by friends that I would have to file a 1099-MISC. Is this the case? I have not received my professional degree yet. Help!

  6. I received a 1099-misc as a result of a type of ‘severance’ package from a company. It was supposed to be a signing bonus, however the company froze hiring before I officially started. Thus the signing bonus became severance pay. (1) Does this mean I have a business? (2) Is this income subject to the ‘self-employment’ tax? Thanks for the help…

  7. Well, you may be able to deduct either depreciation on that truck (or maybe even Section 179 expensing) in the year you buy it… which gives you a serious write-off! If you can buy a truck over 6,000 lbs, you can take that Sec 179 deduction for probably the entire cost of the truck… major tax savings! It doesn’t matter if you finance it or not. You can also deduct your gas, oil, car washes and all that…

  8. I’m wanting to know what is the best advantage for me whether to keep my existing truck and write-off mileage and maintenance, or to purchase a new truck and write-off the complete payment?

  9. I recieve misc. income for the use of my truck from the company I work for. If I purchase a new truck with that misc. income can I write-off the total payment for the truck plus interest, mileage, maintenance?

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