Question

Wyatt, who is employed full -time as a software engineer, sometimes uses his time and talent to assist worthy causes. In 2017, he helped a local nonprofit organization create a new website. Although his primary objective was to help the organization, the directors insisted on compensating him. He received a form1099 -misc from the organization reporting non-employee compensation of $2,800 in box 7.how should Wyatt report this on his tax return?

Answer 1

If a payment is received for services performed is listed in box 7, form 1099-misc, the payer treated the payee as a self-employed worker and referred payee as an independent contractor. The payee will report this income as self employement income and will be taxed accordingly.

If the payee is not in the self employed trade or business of providing services nor he/she is an employee of the payer, then this income will be reported on line 21 of form 1040 as other income.

In this case, Wyatt is not an employee of local non-profit organization, nor he is in self employed trade or business, thus he will report this income as other income on line 21, form 1040.