Taxes on an inherited deferred compensation plan?

Forum|Forum|7 years ago
June 4, 2019
11 replies
0 views

My father died before receiving all of his deferred compensation. I am the beneficiary of it, and received my first payment in 2018. No taxes were withheld -- the employer said FICA taxes did not apply since his death was the prior year.

I received a 1099-MISC. When I enter it into TurobTax, it treats it as business income and says self-employment tax is due. Is this correct? I thought only income taxes needed to be paid on it.

TurboTax Deluxe Online

ScruffyCurmudgeon

Alumni - Champ

Is the deferred income reported in Box 3 or Box 7?

If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67. NOT INTUIT EMPLOYEE . USAR 64-67 AIS/ASA MOS 9301 - O3 . - Just donating my time. **Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.

S

services-Author

Level 2

Box 3 (Other income). Thanks!

S

services-Author

Level 2

Thank you both for the answers. I re-entered everything exactly as you suggested and it came out properly. I found changing one item had caused it to declare the income as business income: checking the box, "Do you intend to get it in 2019?" After I unchecked it, no SE-tax.

D

DavidD66

Level 15

Your welcome. Thanks for that feedback.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

J

j14

Level 2

I filled it out like this, but still have Schedule C questions and forms that I don't know how to answer. I will get the income next year because I am inheriting it as a monthly payment. Any ideas for me? Thanks.

S

services-Author

Level 2

Did you uncheck the box "Do you intend to get it in 2019?" That single answer to one of the questions is what triggered a Schedule-C for me. When I unchecked it, it went away, and the return came out properly.

ScruffyCurmudgeon

Alumni - Champ

I believe that that point is shown in the PDF attached - to not check yes to that question.

If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67. NOT INTUIT EMPLOYEE . USAR 64-67 AIS/ASA MOS 9301 - O3 . - Just donating my time. **Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.

J

j14

Level 2

Thank you. I had not interpreted the "intend to get it in 2019" correctly.

ScruffyCurmudgeon

Alumni - Champ

the issue the IRS is looking as it the meisrepresentation by either employers who decided to avoid employment taxes and employee benefits by reporting employees and if independent contractors; or the alterntative - some folks independent works claim it was only a one-off.

If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67. NOT INTUIT EMPLOYEE . USAR 64-67 AIS/ASA MOS 9301 - O3 . - Just donating my time. **Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.

ScruffyCurmudgeon

Alumni - Champ

Go to the Interview where you can enter a Form 1099-MISC - I'll post a picture once I finish typing.
Enter the payer's information and make sure you enter the financial information in Box 3 where it was reported.
Box 3 results in no obligation at all for either a Schedule C or a requirement to pay Employment Taxes or Self-Employment taxes, but instead results in the income showing on Form 1040 Schedule 1 line 21 "Other Income."

See PDF example below that walks you through step by step.

If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67. NOT INTUIT EMPLOYEE . USAR 64-67 AIS/ASA MOS 9301 - O3 . - Just donating my time. **Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.