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    RENBUCKER's Avatar
    RENBUCKER Posts: 4, Reputation: 1
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    #1

    Feb 24, 2007, 09:16 AM
    Schedule C or Line 21
    I referred four friends over to my cousin who is a manager for an alarm door to door sales company. My cousin then signed them on as door to door sales reps to work in his office in another State for the entire summer. I was not hired as a corporate recruiter, I did not sign up the reps, and I did not go out to public and solicit random people to recruit. I simply just referred four friends to him. At the end of the summer my cousin paid me overrides on their sales totalling $11,050.00 and a 1099-Misc was issued to me with the amount in Box 7 "nonemployee compensation". If I put the income on Schedule C I will be subject to SE tax, If I put it on line 21 I will not be subject to SE tax. Can I put it on line 21 or do I have to put it on a Schedule C? It doesn's seem like it was a business that I had.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Feb 25, 2007, 12:11 AM
    $11,050?

    Sorry, that HAS to be claimed on Schedule C. Putting it on Line #21 WILL BE challenged by the IRS. Count on it!
    RENBUCKER's Avatar
    RENBUCKER Posts: 4, Reputation: 1
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    #3

    Feb 25, 2007, 09:56 AM
    Quote Originally Posted by AtlantaTaxExpert
    $11,050??

    Sorry, that HAS to be claimed on Schedule C. Putting it on Line #21 WILL BE challenged by the IRS. Count on it!
    If I get them to re-issue a new 1099-misc and issue the income in box 3 "Other income" would it still be challenged if I put it on line 21?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #4

    Feb 26, 2007, 10:43 AM
    The location of the $11,050 on the Form 1099-MISC is irrelevent.

    It is the amount that will cause the IRS to challenge the entry on Line #21.
    RENBUCKER's Avatar
    RENBUCKER Posts: 4, Reputation: 1
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    #5

    Feb 26, 2007, 06:26 PM
    Quote Originally Posted by AtlantaTaxExpert
    The location of the $11,050 on the Form 1099-MISC is irrelevent.

    It is the amount that will cause the IRS to challenge the entry on Line #21.
    I was planning on attaching an explanation. I am not worry about them challenging me. I just want it to be correct. Why would it not go on line 21?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #6

    Feb 27, 2007, 11:47 AM
    Because, in the eyes of the IRS, that amount of money is considered self-employment income.

    The explanation statement may be accepted. Heck, give it a try! It beats paying $1,500+ in self-employment taxes.

    Just do not be surprised if the IRS does not buy it!
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