If wages are reported on a 1099-MISC in Box 3, then you will still need to pay the uncollected Social Security and Medicare tax, as well as the income tax. If you enter the 1099-MISC, it will likely populate under a Schedule C and add self-employment tax on the income. This will end up being your portion of the Social Security and Medicare.
The IRS classifies these wages as supplemental wages, along with bonuses, severance pay, taxable fringe benefits, vacation pay, back pay, and overtime. Supplemental pay is anything other than your regular pay. Typically, supplemental wages are added to a W-2. However, there are different withholding methods for supplemental wages that the employer can consider, which are discussed in IRS Publication 15.
Per the IRS, regardless of the method employers use to withhold income tax on supplemental wages, supplemental wages are subject to Social Security and Medicare taxes.
To enter your 1099-MISC in TurboTax, please follow these steps:
- Open your return.
- Search for 1099-MISC with the magnifying glass tool at the top of the page.
- Select the Jump to 1099-MISC link at the top of the search results.
- Enter your 1099-MISC.
- Answer all the questions on the screens that follow.
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