Schedule C vs. Other Income reporting of 1099 income

[MikeB_CPA]

I have a client who received a 1099-NEC reporting income for running a 6-month after-school program.  His wife also received a 1099-NEC from her employer for duties performed outside her normal employment responsibilities, but she also receives a W-2 for the bulk of her income from the same employer who issued the 1099-NEC.

In my opinion, both of these situations check all the boxes requiring the income to be reported on Schedule C and therefore subject to SE tax.  Naturally, the client is pushing back.

Any opinions will be appreciated.

Thanks!

[Terry53029]

Sounds like it is self employment income to me, otherwise they could volunteer for no money

[MikeB_CPA]

My thoughts exactly.  Both husband and wife are of the opinion that because both employers are non-profits that that somehow makes a difference in how their income is to be reported.

Thank you.

[qbteachmt]

"because both employers are non-profits"

Off them this type of option as an example: The clerk also mows the lawn on the weekend. They submit a bill for the labor and show its value, adding a 100% discount. Now the NFP has proof of the value for donation support and the person would not get a 1099-NEC. They also would not get the money 🙂

And don't ever let worker comp insurance audit these people. Nothing like trying to explain why the clerk hurt his back mowing, when that isn't his job rating.

[TaxGuyBill]

Just because it was paid by a non-profit has NOTHING to do with how it is treated.

For the husband, you'll need to look at the business vs hobby rules.  Without more information, it could go either way, but the 'default' would likely be a business.

For the wife, are those additional responsibilities similar to her regular job?  If so, Form 8919 and not Schedule C.  If they are completely different, then look to the business vs hobby rules.