How to enter Form 1099-NEC, Nonemployee Compensation in Lacerte

For tax year 2025 the IRS did not have specified mandated reporting requirements on how to report Qualified Tips and Overtime on the 1099-NEC. These may need to be manually calculated. See guidance here.

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If you're looking for how to create a Form 1099-NEC to issue, see here for how to use Quick Employer Forms to do so.

Where do I enter box 1, nonemployee compensation?

Where you enter nonemployee compensation depends on how your client earned this income, and whether or not they’re self-employed.

If your client is self-employed

You should include the amount on Schedule C or Schedule F as income. Enter the amount on:

• Screen 16 Business Income (Sch. C), or
• Screen 19 Farm Income (Sch. F, 4835)

If your client received this income as an employee

If your client believes they’re an employee, and received Form 1099-NEC in lieu of a W-2, they should request corrected tax forms from the payer. 

If your client can’t get the correct forms:

1. Go to Screen 14.1 SS Benefits, Alimony, Miscellaneous Inc.
2. Scroll down to the Alimony and Other Income section.
3. Enter the amount in Uncollected social security and Medicare tax on wages (8919).

The compensation amount will be reported on the 1040 as wages and will be used to complete Form 8919.

If the income is from a hobby or sporadic activity

1. Go to Screen 14.1 SS Benefits, Alimony, Miscellaneous Inc.
2. Scroll down to the Alimony and Other Income section.
3. Enter the amount and a description in Other income (Ctrl+E).

The amount will be reported on Form 1040, Schedule 1, line 8, as other income, and will not be treated as subject to self-employment tax or uncollected social security and Medicare on wages.

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Where do I enter boxes 4-7, state and federal withholding?

In order to claim tax withheld on 1099-NEC income, the IRS and most states require Lacerteto recreate a digital copy of the Form 1099-NEC your client received and include it in the e-filed return. The program uses your input in Form 1099-MISC/NEC for E-File Returns to meet this agency requirement, AND to report withholding amounts on the appropriate federal or state return.

1. Go to Screen 14.1 SS Benefits, Alimony, Miscellaneous Inc.
2. Select the Add button on the left side of your screen to create a new 1099-MISC/NEC for e-file.
3. Enter the Payer Information from Form 1099-NEC.
4. Scroll down to the 1099-NEC subsection.
5. Enter the box 1 amount in (1) Nonemployee compensation.
6. Enter the box 4 amount in (4) Federal income tax withheld.
7. Enter the box 5 amount in State tax withheld, and select the appropriate state from the drop-down menu.
8. Enter the box 6 identifier in Payer’s state no.
9. Enter the box 7 amount in State income.

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Entering Qualified Tips and Overtime for the Schedule 1-A for tax year 2025

To enter an amount to show on Schedule 1-A line 5 as qualified tips from 1099-NEC:

1. Go to Screen 14.1, Miscellaneous Income.
2. Scroll down to the Form 1099-NEC section.
3. Enter the amount as Cash tips.
   • Only the amount greater than the amount in box (1) Nonemployee compensation will show on Schedule 1-A line 5.

To enter the amount of overtime on a 1099-NEC for the Schedule 1-A line 14b:

1. Go to Screen 14.1, Miscellaneous Income.
2. Scroll down to the Form 1099-NEC section.
3. Enter the amount as Overtime compensation.

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