Contributed by: RustyL, FreeTaxUSA Agent, Tax Pro
The IRS requires certain income to be reported on specific schedules and entered on Form 1040, Individual Income Tax Return. Some examples of this are:
- Business Income (Schedule C)
- Capital Gains Income (Schedule D)
- Rental Income (Schedule E)
Taxpayers often receive a Form 1099-NEC and/or Form 1099-MISC to report these types of income.
In our software, the 1099 and Schedule are two different entries. In most cases, it is necessary to specify which Schedule the 1099 corresponds to. If you do not link the 1099 with a Schedule, you may see this error message (or a similar one) as you prepare your return:
Three things need to happen to avoid/resolve the error message:
- Form 1099-NEC or 1099-MISC must first be added to the software. (Note the above error message will only appear if the 1099 has been entered.)
- Add the 1099 using this menu path: Income > 1099-NEC/1099-MISC.
- Create the Schedule by choosing the type of income detailed on the 1099. Go to the ‘Income’ tab and select one of the following:
- Business Income (Schedule C)
- Rental Income (Schedule E)
- Royalty Income (Schedule E)
- Farm Income (Schedule F)
- Farm Rental Income (Form 4835)
- The 1099 must be attached (connected) to a Schedule. When entering the Schedule types mentioned above, the software will ask if you received a 1099. An option to select a 1099 is then given allowing you to attach the 1099 income to the Schedule.
If you still receive the error after adding the 1099 and creating the Schedule, follow this menu path: Income > Attach 1099-NEC/1099-MISC to connect them.
