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Frequently Asked Tax Questions

Interest, Dividends, Other Types of Income - 1099–MISC, Independent Contractors, and Self-Employed

  1. I received a Form 1099-MISC instead of a Form W-2. I'm not self-employed and I do not have a business. How do I report this income?
  2. My son is a newspaper carrier. I would like to know if this income is subject to social security and Medicare taxes, and if I must file a Schedule C for him.
  3. I received a Form 1099-MISC with an amount in box 7, (nonemployee compensation). What forms and schedules should be used to report income earned as an independent contractor?
  4. What, if any, quarterly forms must I file to report income as an independent contractor?
  5. My child has joined AmeriCorps and has received an income statement. Are these payments taxable?

Rev. date: 10/29/2013

I received a Form 1099-MISC instead of a Form W-2. I'm not self-employed and I do not have a business. How do I report this income?

If payment for services you provided is listed in box 7 of Form 1099-MISC (PDF), you are being treated as a self-employed worker, also referred to as an independent contractor:
There are three basic areas that are relevant to determine employment status:
For more information on employer-employee relationships, refer to Chapter 2 of Publication 15, (Circular E), Employer's Tax Guide and Chapter 2 of Publication 15-A (PDF), Employer's Supplemental Tax Guide.
Unless you were an employee, you report your non-employee compensation on Schedule C (Form 1040) (PDF), Profit or Loss from Business (Sole Proprietorship), or Schedule C-EZ (Form 1040) (PDF), Net Profit from Business:
If you think that you were, or are an employee and you would like the IRS to issue a determination, you should submit Form SS-8 (PDF), Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. If the SS-8 Unit determines you to be an employee, you should report the income reported on the Form 1099-MISC with all of your other income, including income earned as an employee on line 7 of your Form 1040 (PDF).  Use Form 8919 (PDF), Uncollected Social Security and Medicare Tax on Wages, to figure and report your share of the uncollected social security and Medicare taxes due on your compensation if you were an employee but were treated as an independent contractor by your employer. Filling out Form 8919 will allow your social security and Medicare taxes to be credited to your social security account. For an explanation of the difference between an independent contractor and an employee, see Pub.1779 (PDF), Independent Contractor or Employee.

Rev. date: 10/29/2013

My son is a newspaper carrier. I would like to know if this income is subject to social security and Medicare taxes, and if I must file a Schedule C for him.

Your son may be liable to pay into the Social Security and Medicare system by paying self-employment tax:

Special rules apply to services a person performs as a newspaper carrier or distributor. A person is a direct seller and treated as self-employed for federal tax purposes if he or she meets the following conditions:
Carriers or distributors (not including those who deliver or distribute to any point for subsequent delivery or distribution) and vendors (working under a buy-sell arrangement) who do not meet all of the above requirements and are under the age of 18 are generally not subject to self-employment tax.  You must determine which set of rules apply to your son.
 

Rev. date: 12/21/2012

I received a Form 1099-MISC with an amount in box 7, (nonemployee compensation). What forms and schedules should be used to report income earned as an independent contractor?

Independent contractors report their income on Schedule C (Form 1040) (PDF), Profit or Loss from Business (Sole Proprietorship), however you may qualify to use Schedule C-EZ (Form 1040) (PDF), Net Profit from Business (Sole Proprietorship).

Rev. date: 12/21/2012

What, if any, quarterly forms must I file to report income as an independent contractor?

Because you generally will have no taxes withheld from your income, you may need to make quarterly estimated tax payments:
Note: Be aware that there may be state and local requirements for estimated tax payments:

Rev. date: 03/12/2013

My child has joined AmeriCorps and has received an income statement. Are these payments taxable?

Yes. AmeriCorps Education Awards and living allowances are taxable in the year they are paid. If you receive an award, you should receive a Form 1099-MISC (PDF), Miscellaneous Income.  The 1099-MISC will show your award dollar amount in box-3 Other Income, with no withholding.  Report these amounts on line 21 for Other Income on the Form 1040 (PDF).
Visit the AmeriCorps website for more information on the Segal AmeriCorps Education Award programs.