1099-misc is retirement income and not subject to self employment tax

Forum|Forum|7 years ago
June 4, 2019
5 replies
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Carl

Level 11

What box on the 1099-MISC is the income reported in? 3 or 7?

Hal_Al

Level 15

Why and how is retirement income being reported on a 1099-misc instead of a 1099-R? What box on the 1099-misc is the $ in? Money you earned, working part time, while retired, is not "retirement income".

Hal_Al

Level 15

Retirement income and "other income" are taxed the same. So, he could report it on line 21 as "Other income in box 3 of a 1099-Misc" to avoid an IRS inquiry.
I have seen this before, too, but only recently. I'm curious as to how a company sophisticated enough have a retirement plan doesn't know which form to use! One common situation, I've seen, is "retirement supplement" income, such as when the former employer provides additional money to help with health insurance. All the other answers suggest entering it as other income

Carl

Level 11

I've seen this before Hal_Al, and when the recipient reports it on the 1099-MISC and labels it retirement income, it's my understanding the issuer will receive a letter from the IRS about it. It matters what box it's reported in though, so the recipient can have a "heads-up" warning from me about the possibility of them getting a letter too.

Hal_Al

Level 15

The IRS considers anything in box 7 of 1099-MISC to be self employment income. TurboTax (TT) aggressively steers you in that direction, even if the money is in box 3. If you try reporting box 7 income as anything else, you chances of hearing from the IRS are very high.

That said, the key to getting TT to treat it as other income is to follow these steps:

Enter the 1099-Misc

On the next screen Describe what the payment was for

On the next screen select "none of these apply"

On the next screen select "No it didn't involve work like my main job"

On the next screen select "I got it in 2017" ONLY

On the next screen select No, it didn't involve intent to earn money

TT will put the amount on line 21 of form 1040 as other income