Form 1099-NEC

[Christian]

A single taxpayer has come in with one Form 1099-NEC. His company "doesn't want to fool with filling out a W-2". He is not in a business so I am left attempting to discern the best way of handling this. My Uncle who was an IRS agent would simply fill out a Form SE and let them pay all applicable taxes along with any penalties. There was no Earned Income Credit back then and I can't seem to find any info on this. Can he take the Earned Income Credit as his income otherwise qualifies him for it. Clearly he is self employed but not in a business of his own and therein lies my problem.

[Lee B]

Yeah, I have a client who is a full time Home Health Aide for a wealthy family who gets paid about $ 25 per hour.

She doesn't receive  a W-2 or a 1099. I have explained the situation to her but she really likes her job and doesn't want to rock the boat.

So I report her income on Schedule C,and she pays the SE tax.

[Christian]

I can do that but as he works in construction and his jobs are assigned by the company I am sorta lost in space as to indicate his type of business. I suppose I could leave all of that off the Schedule C but cannot recall ever having done so in the past. In effect creating a business which in fact does not exist. He cannot turn them in as they would simply fire him. And of course there is the 20% right off for qualified businesses but clearly this is not applicable.

[GLJEANNE]

That just sucks, I hate companies that screw employees over this way.  There's a way to do so he only pays his own share of SE, but that lets the IRS know the company is doing something illegal.  So if he's afraid of being fired, I think you're stuck with treating it as Sch C, and just call him a Construction company.    He wouldn't have been tracking any job expenses, but maybe he can go back thru his bank records and reconstruct the costs of any safety equipment, tools,  uniforms, etc. that he had to buy.

[Christian]

That is likely what I will need to do and simply overlook any qualified business expense deduction.

[Lee B]

"As provided in section 162, an activity qualifies as a trade or business if your primary purpose for engaging in the activity is for income or profit and you’re involved in the activity with continuity and regularity."

"If you were previously an employee of a business and continue to provide substantially the same services to that business after you’re no longer treated as an employee, there is a presumption that you’re providing services as an employee for purposes of section 199A for the 3-year period after ceasing to be an employee."

[Lee B]

53 minutes ago, cbslee said:

"As provided in section 162, an activity qualifies as a trade or business if your primary purpose for engaging in the activity is for income or profit and you’re involved in the activity with continuity and regularity."

"If you were previously an employee of a business and continue to provide substantially the same services to that business after you’re no longer treated as an employee, there is a presumption that you’re providing services as an employee for purposes of section 199A for the 3-year period after ceasing to be an employee."

Since my client has never been treated as an employee or received a W-2 for the services she providing,I have been deducting QBI.