Tax Prep by Deb Posted February 24, 2018 Report Share Posted February 24, 2018 OK, I have a question here. I have a client who received a 1099 Misc with code 7 non employee compensation. This was a settlement that was reached between my client and her former employer due to not being given lunch and breaks through out the day. Because she was not in business I went ahead and entered the 1099 Misc and had it go straight to the 1040 line 21 subject to se tax. When I do this however it does not show up as earned income for purpose of the earned income credit. If I take it and send it to schedule C it does. What is the correct way to handle this? Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 24, 2018 Report Share Posted February 24, 2018 Schedule C, or C-EZ. The IRS will be looking for that amount on one of those two forms. Otherwise, client will get a CP2000. I have personal experience in this exact same scenario. Use C-EZ and business code 999999. Quote Link to comment Share on other sites More sharing options...
Tax Prep by Deb Posted February 24, 2018 Author Report Share Posted February 24, 2018 Turned out that the problem was not with the EIC but the child tax credit. Any how I just moved everything to Schedule C-EZ and problem solved. 3 Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.