Yes, it is taxable, and it should be entered as a 1099-MISC. If you enter it correctly, it should not impact the EIC as this is not earned income. To enter it in TurboTax, follow these steps:
- Open or continue your return
- Select the magnifying glass and search for 1099-misc. Select the Jump-to link
- Answer Yes to Did you get a 1099-MISC?
- If you already entered a 1099-MISC, you'll be on the 1099-MISC Summary screen, in which case you'll edit the 1099-MISC
- Enter the info from your form into the corresponding boxes
- I assume the patronage dividend is reported in Box 3. If it is reported in another box, the follow-up questions may differ.
- Enter Patronage Dividend under Describe the reason for this 1099-MISC
- Select None of these apply under Does one of these uncommon situations apply?
- Answer No, it didn't involve work like my main job. to Did the back to work bonus involve work like your job?
- Choose the year you got the dividend, 2021.
- Select No, it didn't involve an intent to earn money.
The last question is a little confusing, but you were not in the business of getting collecting dividends. If you were to answer yes to this, it would treat it like self-employment income. This will be reported on your tax return as Other Income on Line 8z of Schedule 1. To preview your 1040:
- Open or continue your return.
- Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
- With the Tax Tools menu open, you can then view your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu
- Scroll down until you see Schedule 1 Line 8z.
