1099-MISC for interest payments on loaned stock

[Welshwind]

I received a 1099-MISC with an amount shown in Box 3: Other Income. This 'income' was from Fidelity as they paid me interest on shares I owned and loaned to them to cover shorts made by other Fidelity customers. For whatever reason, Turbo Tax is trying to force me to include a Schedule C for business income ... but this is not business income, it is personal investment income.  How can I get Turbo Tax to treat this 1099-MISC as investment income so I'm not required to file a Schedule C? There are some boxes on Schedule C that I cannot provide an answer to because they don't exist... Like principal business code and accounting method.

[Anonymous]

don't use a 1099.  enter as misc income schedule 1 line 21.  however, I would agree that what they paid you was interest and they probably should have issued you a 1099-int.   

[rjs · Accepted solution]

You must have answered a question wrong somewhere along the line. Income from 1099-MISC box 3 does not normally go on Schedule C. Here's how to enter a 1099-MISC with income in box 3 in TurboTax so that it is reported as "other income" on Schedule 1 line 8. (For 2019 it goes on Schedule 1 line 8, not line 21.)

• Click Federal Taxes.
• Click Wages & Income.
• Click "I'll choose what I work on" or "Jump to a full list."
• On the screen "Your 2019 Income Summary," scroll down to the section "1099-MISC and Other Common Income." Click the Start button for "Income from Form 1099-MISC."
• The next screen asks "Did you get a 1099-MISC?" Click Yes.
• On the next screen enter the information from the 1099-MISC form, then click Continue.
• TurboTax will now ask a series of questions about the 1099-MISC income. Answer as follows, even if some of the answers aren't true.
• "Describe the reason for this 1099-MISC." - It doesn't matter what you enter. Enter a short description such as "Interest." Click Continue. You will see this description used in some of the subsequent questions, but it will not appear on your tax return.
• "Does one of these uncommon situations apply?" - Select the last choice, "None of these apply," and click Continue.
• "Did the Interest involve work that's like your main job?" - Select No and click Continue.
• "How often did you get income for Interest?" - "I got it in 2019" will already be checked. Don't check any of the other boxes. Just click Continue.
• "Did the Interest involve an intent to earn money?" - Select No and click Continue.

This will report the income as "other income" on Schedule 1 line 8 with the description "Other Income from box 3 of 1099-Misc."

[Welshwind]

I did as you suggested. I still had form Schedule C show up in the forms view with the red ! . Having been a software developer, I'm thinking that once it is there (by answering the questions differently than you directed), changing the answers as you direct doesn't remove the form. Not an issue, from the forms view there is the ability to delete the form. I did that and Schedule C did not reappear. The amount of the 1099-MISC is indeed on Line 8 of Schedule 1 with the comment as you stated so I'm good to go. Thanks!