To report the 1099-Misc so that self-employment tax is not computed, follow these steps:
- Down the left side of the screen, click on Federal.
- Across the top of the screen, click on Income & expenses.
- At the screen Your tax breaks, scroll down to Income from 1099-Misc. Click on Edit/Add to the right.
- At the screen 1099-Misc Summary, click on Edit to the right of the 1099-Misc to be edited.
- Enter the form information, click Continue.
- At the screen Describe the reason for this 1099-Misc, enter the reason. Click Continue.
- At the screen Does one of these uncommon situations apply?, click on None of these apply.
- At the screen Does the xxx involve work, click on No, it didn’t involve work.
- At the screen Did the xxx involve an intent to earn money?, click on No, it didn’t.
- The income should be reported as Other Income on line 8 Part I of the 1040 Schedule 1 and not be subject to self-employment tax.
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