Hi,
I received a 1099 form for a referral fee last year, but I am unemployed. How do I avoid paying self-employment tax on this amount when I file my taxes?

If the amount on the Form 1099-MISC is LESS than $400, you can enter it on Line #21 of Form 1040 and report it as "OTHER INCOME" with no problem from the IRS.

Thank you for you reply, but it is over $400.

Okay, then, if the amount of money is in Box #7 (non-employee compensation), you MAY be stuck with completing a Schedule C.

You can still put the income on Line #21 of Form 1040, but if the amount is a lot more than $400, the IRS may send you a letter asking you to explain the income. Referral income is NOT subject to self-employment taxes, but the IRS does NOT know it is referral income.