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):
- Taxation: This income is taxed at your ordinary income tax rate.
- 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):
- Taxation: This income is also taxed at your ordinary income tax rate.
- 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..
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