<p>My husband gets a gazillion w-2s for residual payments. Many of them are for very small amounts of money. This year (for 2009 taxes) he received a 1099misc from one of the payment services instead of a w-2. It’s only for $20, but when I input all our information into TurboTax, because of that one 1099 it generates a Schedule C–Profit and Loss From a Business. It asks for his business address, his accounting method, if he acquired the business during 2009, whether he “materially participates” in the business, etc.</p>
<p>The thing is that he doesn’t have a business unless just getting a 1099 for $20 makes him automatically have a business… which is what? He’s an actor, but all his other wages are in the form of w-2s.</p>
<p>Should I just send in the Schedule C declaring the $20, but leave the business address, accounting method, “material participation” fields blank? TurboTax keeps telling me there is an error in my tax return because of this.</p>
<p>So is he a business just because of this $20?</p>
<p>Not a CPA, but I can offer a practical perspective …</p>
<p>Yes you should declare the $20 as income. If you have a bunch of business-related expenses you may be substantially ahead if you file the Schedule C. If you don’t, your return will be simpler if you put the $20 under ‘Miscellaneous Income.’ JMHO, and yes I realize this doesn’t address what’s “proper.” But hey, how much angst should one have over $20?</p>
<p>I agree! It’s $20 bucks for cryin’ out loud. I fully intend to declare it as income, I just wasn’t sure why I needed this Schedule C that I don’t even know how to fill out.</p>
<p>My husband has some professional expenses, but we just include those in the regular list of deductions and we still don’t get above the standard deduction anyway. There’s no value to us in trying to pretend like we have a business.</p>
<p>But thank you for the Misc. Income idea. I did not know that was an option. (Because like the dummy I am, I just let myself be led around by the nose by Turbo Tax.)</p>
<p>EDIT – oops. I tried to enter it as Misc. income and TurboTax says “Do not enter income reported on a 1099MISC.” Arghhh.</p>
<p>Hal let me… didn’t want me to, but didn’t stop me either. I just had to ignore Hal’s admonishments.</p>
<p>By the way, that not only rid me of the inscrutable Schedule C, but also a strange beast I’d never seen before called a Schedule L… which basically just said I could take the standard deduction, which is what I was taking anyway. Bye bye, C & L!</p>
<p>Having been in this situation myself, basically all 1099 income MUST be reported under Schedule C. Your husband can then deduct customary business expenses against the income to “zero it out”, such as agent commission, photo/resume duplication, job hunting expenses, business phone, etc.</p>
<p>I don’t care about zero-ing it out. It’s only $20. (I’d be happy to pay the IRS $25 just to get rid of it!) It was from a SAG job a million years ago. All his Equity income is on w-2s, and in fact all his SAG income is w-2s except this one stupid piece of paper. Even this payment service company has given him w-2s in the past. They even gave him a w-2 for 2009, but also tacked on this 1099 for just $20 of his 2009 receipts from them. Ridiculous.</p>
<p>Acting isn’t a business in that sense for him. I mean, it’s his profession, but he doesn’t earn income from anything else. All his work is under union contracts, and as far as I know both Equity and SAG require their signatory producers to pay wages as regular employers. He’s been doing this and nothing else for 30+ years, and we’ve always gotten w-2s.</p>
<p>I understand that it’s only 20 bucks; it is ridiculous. However, the IRS has gone after other actors for misreporting income, even $20. My recommendation – and that of SAG, AFTRA, and AEA – is to report the income on Schedule C.</p>
<p>So if I were to do that, what would I put for his accounting method, if he acquired the business during 2009, whether he “materially participates” in the business? I don’t even know what that is asking.</p>
<p>Yes, he “materially participates” in the business, accounting method is “cash”. You might want to also read about Qualified Performing Artists and whether he/you qualify, and the IRS instructions for Schedule C: </p>
<p>I see the Form 2106 form was not relevant for us since his professional expenses (plus all our other deductions) are less than the standard deduction anyway. Even with the TurboTax version of our taxes with the Schedule C, we did not have (or need) a Form 2106.</p>
<p>Since our tax return is all paper and sent in the old fashioned way, I think I’ll just report it as “Other Income” and include a copy of the 1099 with a note explaining what I did with it. That way if the IRS has a question, they can just ask or make an adjustment or whatever. Our taxes and our tax refund works out exactly the same either way.</p>
<p>Thank you all for your attention to my way-too-specific little $20 drama. :)</p>
<p>'rent of 2, I feel your pain - I had to fill out paper Schedule C’s in the pre-TurboTax days! God forbid you ever have to deal with AMT :eek:</p>
<p>My H’s “business” was a couple of telephone calls to consult someone at a Big Research University, which resulted in a patent, which in turn generated a teeny licensing fee split between the university and the inventors. So my H “had a business” that year (I selected “independent consulting” or something like that from the list provided by the IRS). Cash accounting, zero expenses, material participation and the whole nine yards. The IRS has not bugged us about that, so I assume it was done right :)</p>
<p>You’ve just demonstrated the biggest problem with programs like Turbo Tax. They ask a million questions that a tax profesisonal knows can safely be ignored, but totally confuse a simple taxpayer. </p>
<p>Yes. Put it under “othr income” and don’t worry about it.</p>
<p>A secret from a good friend who is an IRS auditor - if the money is small and the mistake is minor and made in good faith, she does her very best to ignore it. It is a much a pain for her to try and figure it out as it is for you.</p>
<p>Yeah… I think so too. Actually I’m not even sure that putting it in Other Income is a mistake after talking to the accountant where I work. He said that if the income is in Box 7 (non-employee income) it’s a touchier issue and maybe would warrent a Schedule C – although since the amount is so tiny, still probably not. But in my case it’s reported in Box 3 (royalties) and so is a bit different and less significant.</p>
<p>Anyway, the IRS won’t have to figure it out or come after me or whatever. I’m going to send a copy of the form and explain to them that I put it in Other Income. I’ll also tell them that if it should go elsewhere they are free to either let me know or just adjust it themselves. :)</p>