How do you handle income from a "go-fund-me" with a 1099 NEC from a company client never worked for. IRS rejected return based on unpaid Social Security tax

[ChuckTaxGuy]

Client has regular job. Son was killed in an motorcycle accident. Local motorcycle company did a "go-fund-me" to help with burial expense. That company sent client a 1099 NEC showing the Go-fund-me amount. IRS rejected her return based on unpaid social security tax on that money

[Just-Lisa-Now-]

"IRS rejected her return based on unpaid social security tax on that money"

Rejected? or sent a letter looking for the SE tax?

Personally, I would have plunked that NEC amount on a Sch C, then backed it out as Other Expenses with the description that it was from a Go Fund me and considered a gift, not income. To avoid the IRS correspondence.

An NEC form should never have been issued.

[IRonMaN]

Yeah, that should have been a gift and no 1099 involved.  This sounds more like a "go tax me" which isn't correct under the circumstances.

[ljr]

go fund me is a gift

they should not have received a 1099 at all.

you could link it to a schedule c then put an expense called nontaxable go fund me and net out to zero income.

[BobKamman]

So, this is a 2024 return and IRS sent a CP-2000?  All they want is SE tax?  So she paid income tax on it?  Or maybe was in a zero income tax bracket so it wouldn't make a difference?  

Was there a connection between the motorcycle company and the deceased son?  Like, he was an employee?  Do they collect money for every motorcyclist who dies accidentally?  And then send all of them a 1099-NEC?  

[ChuckTaxGuy]

This is a 2025 return. Son did not work for motorcycle company. He did purchase motorcycle from them. He also associated with other riders from that company. That is why they did the Go-fund-me. Mother has no work relationship with company.

[BobKamman]

How did IRS reject the return?  How was it shown?  Why was it reported anywhere in the first place?  If you receive a gift, it's not taxable, even if the Pope sends you a 1099.