Retirement tax questions
It depends. Commissions paid after retirement are not considered self employment for insurance agents. They are taxable income for personal income tax, however not subject to social security or medicare tax.
- IRS Publication 334 (see page 26)
If you happen to be an insurance agent during employment see the following IRS rules:
- When a former insurance salesperson receives termination payments these payments are not self-employment income if all of the following conditions are met:
- (1) the amount of payments is not based upon length of service or overall earnings from service performed for the company,
- (2) you received the payments after your agreement to perform the services with the company ended,
- (3) you did not perform any services for the company after your service agreement ended and before the end of the year you received the payment,
- (4) you entered into a covenant not to compete against the company for at least 1-year beginning on the date your service agreement ended, and
- (5) the amount of the payments depended primarily on policies sold by you or credited to your account during the last year of your service agreement.
It's quite specific about what's NOT self employment income and requires certain conditions that aren't common (e.g., covenant not to compete).
To report this type of income in TurboTax:
- Click Federal Taxes -> Wages & Income and scroll down to Less Common Income
- Go to the last selection, Miscellaneous Income and click Start
- Go to the last option, Other reportable income and click Start
- When it asks, "Any other reportable income?" say yes and then type in a description and the amount
