Form 1099-MISC Report it or Not?

If you have a 1099-MISC that is not self-employment income subject to self-employment taxes, you should have the payer reissue another 1099-MISC to you and have the amount put in Box 3 of the 1099-MISC as Other Income instead of Box 7 as Nonemployee Compensation. IRS will expect you to report the Box 7 nonemployee compensation on Schedule C and pay self-employment taxes on it.

Occasional income that is neither regular, frequent, continuous or intended to make a profit, is not considered self-employment income. This would also include sources of unearned income such as prizes and awards, payments for participating in medical research studies, legal punitive damages, etc.

If your income is not self-employment income, you do not need to use Schedule C to report business income. Instead, the 1099-MISC income will go onto Line 8 of the Schedule 1 as Other Income that is only subject to regular tax and not subject to self-employment taxes.