How do I report securities lending at fidelity?

If your brokerage account lends your stock and you received income from securities lending, reported on Form 1099-MISC in either Box 8 (Substitute Payments) or Box 3 (Other Income), here are the two options depending on the box:

 

Box 8 (Substitute Payments in Lieu of Dividends):

1. Taxation: This income is taxed at your ordinary income tax rate.
2. Steps in TurboTax:
   • Go to the Income tab.
   • Scroll down and click Add Income.
   • Scroll down to Other Common Income and select Form 1099-MISC.
   • Go back to Income tab select 1099-MISC and enter the information from your 1099-MISC, describing the reason (e.g., "Securities Lending Earnings").
   • Proceed through the questions.
   • Enter the amount in Box 8.
   • TurboTax will treat this as ordinary income.

Box 3 (Other Income):

1. Taxation: This income is also taxed at your ordinary income tax rate.
2. Steps in TurboTax:
   • Go to the Income tab.
   • Scroll down and click Add Income.
   • Scroll down to Other Common Income and select Form 1099-MISC.
   • Go back to Income tab select 1099-MISC and enter the information from your 1099-MISC, describing the reason (e.g., "Securities Lending Earnings").
   • Proceed through the questions.
   • Enter the amount in Box 3.
   • When asked if any uncommon situations apply, select "None of these apply".
   • When asked if the income involved work, select "No".
   • When asked if the income involved an intent to earn money, select "No".
   • This will also be reported on Schedule 1, Line 8 (Other Income) of your Federal 1040 tax return.

 

These steps ensure that your securities lending income is correctly reported as "Other Income" and not as self-employment income.

 

If you needed something else reach back out with clarifying details..

 

Original Post

Can you confirm these questions come up on the online Turbo Tax entering 1099-misc line 8?   The path we are presented with is employment description, etc...

 

• When asked if any uncommon situations apply, select "None of these apply".
• When asked if the income involved work, select "No".
• When asked if the income involved an intent to earn money, select "No".
• This will also be reported on Schedule 1, Line 8 (Other Income) of your Federal 1040 tax return.

To enter income from a Form 1099-MISC that is not from self-employment, in TurboTax Online, enter Form 1099-MISC information in the section to which it pertains. In Wages and Income, there are several locations where you can enter a Form 1099-MISC.

 

If you enter Form 1099-MISC in the Other Common Income section, at the screen "Does one of these uncommon situations apply?", a list of options appears from which you can select that includes reasons for Form 1099-MISC other than self-employed income.

 

The Instructions for Form 1099-MISC state the following regarding Line 8 (note that the instructions are directed to the issuer of the form):

 

Enter aggregate payments of at least $10 of substitute payments received by a broker for a customer in lieu of dividends or tax-exempt interest as a result of a loan of a customer's securities. Substitute payment means a payment in lieu of:

• A dividend, or
• Tax-exempt interest to the extent that interest (including original issue discount) has accrued while the securities were on a loan.

 

In the alternative, you can enter the amount of a Form 1099-MISC under Other Reportable Income. In TurboTax Online:

 

1. Go to Wages and Income
2. Scroll down to Less Common Income
3. Go to Miscellaneous Income
4. Select Other Reportable Income and follow the prompts. Enter a description for the reason for the payment.