Tax Year Prior to 2020: 1099-misc

[Tito1207]

My Broker issued me a 1099-Misc for my capital gains. I used to automated download into Turbo Tax and it properly recorded the amount from my broker (Robinhood Securities LLC).

Yet, Turbo Tax is recognizing it as a self-employed Schedule C.

How can I avoid getting identified as a Schedule C business especially since I'm not self-employed?

[TomK100]

What box has an amount entered in it?

[fanfare]

capital gains must be reported to you on a 1099-B, not 1099-MISC.

[Tito1207]

Tom,

The statement reported the capital gains box 3. Is there an error by the broker?

Thanks for your help

Tito

[Tito1207]

Hi Fanfare

I would think that this broker would know better than reporting a capital gains as a 1099-MISC?

[VictorW9]

It looks like you did receive a 1099-R form and not a 1099-Misc. The 1099-R is the form that contains a capital gains box 3. The 1099-B box 3 is for checking whether proceeds are collectibles or Qualified Opportunity Fund (QOF). Double check the form again and enter it it the correct way.

[fanfare]

Robinhood had a promotion and they sent 1099-MISC to new customers.
Then the customers come here to ask what to do with it.

[Tito1207]

Hello Fanfare,

Actually, I signed up for that promotion and honestly, I was not comfortable with the version of Turbo TAX (TT) that was offered. I have been a TT user for decades and the interface (GUI) promotion version of Robinhood/TT was nothing like the Basic, Deluxe or Premier versions.

So, I decided to purchase the Premier version of TT.

I got back a reply from Robinhood today and they said I "should contact a tax advisor"

But all I wanted to know was where did the 1099-MISC "Box 3, Other Income" come from?

I don' think that's "tax advice"

Now, I have to file as if I had a Schedule C business when I don't have a business, I'm strictly a W-2 wage earner.

If there is income that has to be reported fine but if it's not short-term capital gains/losses, long-term capital gains or dividends then Robinhood should be able to identify it so to avoid filing a Schedule C.

I'm not finding fault here but why not explain why the funds are recorded as "Other Income", that was derived for "Investment Income/Losses"? Lastly is there really only for a tax advisor's question?

Thank you for your time and consideration,

Tito

[Tito1207]

Hi Victor,

although I have looked at my 1099-forms many times, I actually look again after your suggestion.

Unfortunately, I thought about the QOF factor but the forms I received were only the 1099-B & 1099-MISC.

I will try to paste the 1099-MISC here although it may not appear legibly.

"MISCELLANEOUS INCOME 2019 1099-MISC* OMB No. 1545-0115
2- Royalties 0.00
3- Other income $XX.XX
4- Federal income tax withheld 0.00
8- Substitute payments in lieu of dividends or interest 0.00"

So you see, that I was issued a 1099-MISC, all I need to know is what is the source of this income?

My broker replied that I need to seek a tax professional's advice, okay fine but can't they explain where the funds are from i.e. Short or Long Term Capital Gains or dividends or QOF?

The broker's statement as a boiler plate statement that there can be funds that are neither Short or Long Term Capital Gains or dividends but all brokers' should be more detailed?

I did not have long term gains so that's not an issue.

My only concern is I do not want to be categorized as a self-employed Schedule C when I'm strictly a W-2 wage earner.

Turbo Tax software is forcing the "Other Income from box 3 to be recognized as a Schedule C business

Thank you for your time and consideration,

Tito

[Tito1207]

Hi Tom

It was Box 3 See the pasted info. below:

MISCELLANEOUS INCOME 2019 1099-MISC* OMB No. 1545-0115
2- Royalties 0.00
3- Other income XX.XX
4- Federal income tax withheld 0.00
8- Substitute payments in lieu of dividends or interest 0.00

PS I left out the (small) amount reported.

Thank you for your time and consideration,

Tito

[KrisD15]

Delete that 1099-MISC

Re-enter

Click Federal

Click Wages & Income

Click “See All Income” if needed

Scroll down (PAST SELF-EMPLOYMENT) to “Other Common Income”

Click “Show more”

Scroll down to “Form 1099-MISC”

Click Start

Enter the 1099-MISC and Continue

On the “Describe the reason for this 1099-MISC” screen type in something like “promotional incentive” and Continue

Select “None of these apply” and Continue

Select “No, it didn’t involve work like main job” and continue through the interview selecting the appropriate answers for a one-time payment to cover expenses and not job related work

The amount from the 1099-MISC will be reported as Other income on the 1040 line 7a, not as Self-employment

[Tito1207]

I wish I had looked in here before sending out my Federal and State returns. Now not only do I have the Schedule C filed with a statement that the $29 came from my stock broker's issued 1099-Misc.

But I also received an email this week that my Feral & State returns were rejected because of some other issue with Turbo Tax Form 8801 needing pending update. I now know not to file so early because of these "pending updates"

Question: Since  my returns were rejected, do I get to correct the the stock broker's 1099-MISC entry??

Thank you for the great advice, hopefully I will be able to implement it.

[VictorW9]

Follow these directions to post 1099-Misc, box 3 income not subject to self-employment taxes.

• Down the left side of the screen, click Federal.
• In the center of the screen, click Income & expenses.
• On the screen Your income and expenses, scroll all the way down to the last section, Less Common Income.
• Click the Start or Update button for the last topic, Miscellaneous Income, 1099-A, 1099-C.
• On the next screen, Let's Work on Any Miscellaneous Income, scroll down and click the Start or Update button for the last topic, Other reportable income.
• The next screen asks, Did you receive any other taxable income. Click Yes.
• On the next screen, Other Taxable Income, enter a description and the amount. Click Continue.
• On the next screen click Done.

The income will be reported on Schedule 1 line 8 with the description that you entered.

[Tito1207]

Victor,

Thank you so much! you and "KD" have removed the stress of avoiding any mistakes on my return.

Now, I just have to wait for the Turbo Tax update to Form 8801.  My return was rejected due to an update that did not arrive in time.  After the update arrives tomorrow, I will still wait for "the coast to be clear" before re-filing as I do not want any more surprises. I want to continue filing hassle free returns.

Thank you for your help.

[borumrm]

So in responding to the original question when I follow the instructions to enter 1099-Misc income via the less common income those instructions specifically indicate you should not enter income that has been reported via a 1099-MISC.  Since my income was reported via a 1099-MISC will this cause any issues with the IRS?  Should the turbo tax instructions be modified?