Dependency, Filing Status, and Income Documents
Other Forms of Income
Form 1099-NEC (Non-Employee Contractors)
Self-Employed and Independent Contractors
Form 1099-NEC is a new form for 2020 issued to taxpayers who are considered independent contractors rather than employees. Independent Contractors can work in any profession, but you will often this form for taxpayers who work on a contract basis or who are self-employed, including Uber and Lyft Drivers, construction workers, hair stylists and barbers, etc. Independent Contractors are unique in that they can subtract most expenses directly related to their job from their income, however, they have to pay larger amounts of Social Security and Medicare taxes than traditional employees. Independent Contract income is considered earned income.
This form is only in scope for advanced certified volunteers. Volunteers interested in becoming advanced certified can view the optional self-employment income topic attached to this lesson.
Form 1099-Misc covers most forms of income that are not listed on any other tax form. Most commonly, you will see an amount in box 3. You will often see box 3 income for one time jobs, such as poll work.
The taxpayer may receive one or more Forms W-2G reporting gambling winnings. Total gambling winnings
must be reported as other income. If the taxpayer also had gambling losses, the losses can only be
deducted as an itemized deduction, HOWEVER, taxpayers must still report the full amount of winnings as income.
Other Common Forms of Income
There are a few other sources of income that you will see at VITA sites, however, they will not have a large source of the taxpayer’s income and they are relatively easy to enter.
- Capital Gains or loss items—Can be reported on 1099-B or 1099-DIV
- Volunteers interested in becoming advanced certified can view the optional capital gains and loss items topic attached to this lesson.
- Taxable State Refunds–1099G
Income Not Reported on a Tax Form and Less Common Income
Some sources of Income are not reported on any tax forms at all, however, they still need to be added to the return. Use the Intake and Interview form to confirm with the taxpayer if they have any of these sources of income that may need to be reported on the return.
- Alimony Received during the year
- Only applies for divorces that occurred prior to 2019
- If the taxpayer receives alimony and divorced anytime during 2019, it will not go into the tax return
- You will need to enter in the ex-spouse’s Social Security Number and the date of the divorce
- Jury Duty Income
- Enter in the total amount of income the taxpayer received for jury duty during the year
- Some employers require that the taxpayer forfeit their jury duty income; if this occurs, you will still need to enter in the jury duty income the taxpayer received during the year, but the taxpayer will be eligible to claim an adjustment for the amount of jury duty income reported.
- Scholarship Income
- Scholarship money used for items other than tuition, books, or required course materials, will be considered taxable.
- Cancellation of Debt (Advanced Certification Required)
- Only non-business credit card debt is in scope for the VITA program
- The taxpayer must have been solvent at the time the debt was canceled.
- A debt includes any indebtedness for which a taxpayer is liable or which attaches to the taxpayer’s property, such as auto loans, credit card debt, medical care, professional services, mortgages, and home equity loans. Generally, if a debt for which a taxpayer is personally liable is canceled or forgiven, the taxpayer must include the canceled amount in income.