I received a Form 1099-MISC instead of a Form W-2. I'm not self-employed, 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. You do not necessarily have to "have a business," but simply perform services as a nonemployee to have your compensation treated this way. The payer has determined that an employer-employee relationship does not exist in your case. That determination is complex, but is essentially made by examining the right to control how, when, and where you perform those services. It is not based on how you are paid, how often you are paid, nor whether you work part-time or full-time. There are three basic areas that are relevant to determine employment status:
behavioral control,
financial control, and
relationship of the parties
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. If you think that you were, or are, an employee and you would like the IRS to issue a determination, you may submit Form SS-8 (PDF), Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
Unless you think you were an employee, you report your nonemployee compensation on Form 1040, Schedule C, Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ, Net Profit from Business. You also need to complete Form 1040, Schedule SE, Self-Employment Tax, and pay self-employment tax on your net earnings from self-employment, if you had net earnings from self-employment of $400 or more. This is the manner by which self-employed persons pay into the social security and Medicare trust funds. Employees pay these payroll taxes, as well as income tax withholding, through deductions from their paychecks. Generally, there are no tax withholding on self-employment income. However, you may be subject to the requirement to make quarterly estimated tax payments. If you did not make estimated tax payments, you may be charged an underpayment of estimated tax penalty.
