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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 he must file a Schedule C.
  3. I received a Form 1099-MISC with an amount in box 7 for nonemployee compensation. What forms and schedules should I use 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. I received an AmeriCorps Education Award and have received an income statement. Are these payments taxable?

Rev. date: 12/13/2013

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), the payer is  treating you as a self-employed worker, also referred to as an independent contractor.
There are three basic areas that are relevant to determine if an employer-employee relationship exists:
If you think that you were an employee of the payer and you would like the IRS to issue a determination of your worker status, you should submit Form SS-8 (PDF), Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
If you were not an employee of the payer, where you report the income depends on whether your activity is a trade or business.  You are in a self-employed trade or business if your primary purpose is to make a profit and your activity is regular and continuous.
For an explanation of the difference between an independent contractor and an employee, see Publication 1779 (PDF), Independent Contractor or Employee.  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, Employer's Supplemental Tax Guide.

Rev. date: 12/13/2013

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

As a newspaper carrier, your son may be a direct seller liable to pay self-employment tax.  A direct seller is someone who satisfies the following conditions:
Self-employed persons, including direct sellers, report their income on Schedule C (Form 1040) (PDF), Profit or Loss from Business (Sole Proprietorship), or Schedule C-EZ (Form 1040) (PDF), Net Profit from Business.  Schedule SE (Form 1040) (PDF), Self Employment Tax, also must be filed if a person’s net earnings from self-employment are $400 or more.
If your son does not satisfy the conditions above, he may still be liable to pay self-employment tax if he is engaged in a trade or business.  Alternatively, if your son is 18 years old or older and does not satisfy the conditions above, he may be an employee whose wages are subject to income tax withholding, and social security and Medicare taxes.  
For more information on the rules that apply to direct sellers and newspaper carriers and distributors, see Publication 334, Tax Guide for Small Business.  For an explanation of the difference between an independent contractor and an employee, see Publication 1779, Independent Contractor or Employee.

Rev. date: 12/13/2013

I received a Form 1099-MISC with an amount in box 7 for nonemployee compensation. What forms and schedules should I use 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: 12/13/2013

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.  For information on estimated tax payments, refer to Form 1040-ES (PDF), Estimated Tax for Individuals.
Note: Be aware that there may also be state and local requirements for estimated tax payments.  You may want to go to your state's individual website for additional information.  To access information for your state, go to our State Government Websites page.

Rev. date: 12/13/2013

I received an AmeriCorps Education Award and have received an income statement. Are these payments taxable?

Yes. AmeriCorps Education Awards are taxable in the year they are paid. If you receive an award, you should receive a Form 1099-MISC (PDF), Miscellaneous Income, if the payment was $600 or more during the year.  The 1099-MISC will show the amount of the award in box 3, Other Income, with no withholding.  Report the amount on the line "Other income" on Form 1040 (PDF).
Visit the AmeriCorps website for more information on the Segal AmeriCorps Education Award programs.