I receive a 1099 Misc for my volunteer firefighter LOSAP. It is not taxed by NYS. How do I enter this 1099? It takes out NYS tax when I complete the entry.

[KrisD]

After you enter the 1099-MISC on the Federal return, you will subtract it from the New York state return using Form IT-225. This form IS supported in the TurboTax programs. 

According to the State of New York:

"The State has released a new form in 2014, the IT-225. This form is used to report any NewYork additions and subtractions that do not have its own line in the IT-201. The LOSAP exemption is subtraction S-130. Since the State has created this new form, the federal tax form on which the LOSAP distribution is reported should not create any difficulty in taking this exemption."

http://www.penflexinc.com/c8/important-tax-information-c41.html

[firefighteremt79]

After running review for NYS tax return I get a response Stmt 225 NYS subs Code S-130 should not be entered for an IT201 filer. How do I solve this problem?

[firefighteremt79]

Worked for me for 2018 but keep getting error on review for 2019 filing.

[KrisD15]

Are you a full-year resident of New York?  

[NCFM80]

Worked for me 2020.

[Tomd24]

I receive LOSAP (it is already in your questions but the answers don't really explain how to fix it on the fed.  It is NOT self employment income but income for the longevity of service award (program - thus losap).  When I entered it in 2020 I must have done something so that it doesn't show in the self employment tax but lower in the pension lines.  Now when I enter it into a 1099 - I get all sorts of questions regarding self employment and such - none of which are applicable and I certainly don't want to pay self employment tax on it.  How do I enter it or do I just enter is as a 1099R?

[LenaH]

No. Do not enter it as a 1099-R. If bonuses or awards are reported on a 1099-MISC in Box 3, then you will still need to pay the uncollected Social Security and Medicare tax, as well as the income tax. This could be why it is populating under your Schedule C and adding self-employment tax (which will end up being your portion of the Social Security and Medicare on this income). 

The IRS classifies bonuses as supplemental wages, along with severance pay, taxable fringe benefits, vacation pay, back pay, and overtime. Supplemental pay is anything other than your regular pay.

Typically, bonuses and awards are added to a W-2. However, there are different withholding methods for supplemental wages that the employer can consider, which are discussed in IRS Publication 15.

Per the IRS, regardless of the method employers use to withhold income tax on supplemental wages, supplemental wages are subject to Social Security and Medicare taxes. 

@Tomd24

[NCFM80]

This still doesn't quite answer the question.

Bottom line is that the 1099-Misc in question is a pension, authorized by the State of New York and and each local municipality where a Volunteer Fire Department is located, but is funded by the individual fire district or company for Volunteer Firefighters that is not taxable by the State of New York.  The pension amount is determined by the length of service credited to the individual Firefighter, hence the label "Length of Service Awards Program."

I do collect a pension from the NYSLRS which is also exempt from NYS taxes but is federally taxable.  However the NYS pension is not subject to Social Security taxes and I hope that the LOSAP pension is not subject to Social Security taxes either.

Intuit would truly provide a great service to their customers if they would investigate this with the IRS so that we can get a true answer to our inquiries instead of having the multitude of TurboTax customers having to individually contact the IRS and get a different answer from each rep they get in contact with.

PLEASE IMPROVE THE ANSWERS ON THIS SUBJECT.

[ZoltanB45]

Enter the amount received as Hobby Income. It will not be subject to self employment tax.

1. income and expenses
2. less common income
3. miscellaneous income
4. hobby income

[NCFM80]

Sorry, but the "EXPERTS" giving advice here need to get on the same page.  One says the LOSAP payments are not to be considered as self employment income and should not be subject to Social Security taxes, but you say otherwise. 

Which is it?

" AmyC

Employee Tax Expert

‎March 5, 2021 4:26 PM

It should not be generating SE tax. The questions are trying to determine if you are getting this for self employment to owe tax. You have to answer so the program knows it was not an intent to earn money. Let's fix that:

1. Log in to your return.
2. Go to income
3. Scroll down to Other Common Income
4. Select Income from 1099-MISC
5. Edit
6. Guessing the income is in box 3, may have tax withheld in box 4
7. Continue
8. Describe the reason, Firefighter Svc Award or similar
9. continue
10. None of these apply
11. Continue
12. Did this involve main job?
13. No
14. Continue
15. How often do you get?
16. Got in 2020
17. Continue
18. Intent to earn money?
19. No
20. Continue
21. Do you have another?
22. No
23. Continue
24. No, SE tax now.

You will need to subtract it out from NY. See I receive a 1099 Misc for my volunteer firefighter LOSAP."

[NCFM80]

Please help.  I am trying to fix this (2021 taxes) per the instructions but after selecting continue in step 11 the net screen asks "Did you receive a Form 1099-K?"

Steps 12-23 cannot be followed.

How do we fix this now?

TIA

NCFM80

[DaveF1006]

To clarify, what form are you attempting to enter?

@NCFM80

[NCFM80]

Hi Dave,

The form giving me a hard time is 1099-MISC issued for Length of Service Award Program (LOSAP) payments for serving as a volunteer firefighter in the State of New York.

The payments are not taxable by the State of New York and are not be subject to Social Security or Medicare taxes and should not be treated as self employment/sole proprietor business income.

In the "Picture of Your 2021 Income" in TTax Premier 2021 it lists the payments as "Sole Proprietor Business" which is incorrect.  With this mis-categorization it seems TTax is adding self employment taxes (Fed, SSA, Medicare, and State Taxes).

I did get another reply from one of the "Tax Experts" that tells me to simply indicate the payments received are "Hobby Income" thereby not being subject to business taxes.

I had the same problem last year but don't recall how it was resolved.  Is there a way to find that out in 2020's tax return file?

Thanks for whatever help/guidance you can provide.

NCFM80 

[JohnB5677]

To properly post this 1099-MISC use these steps.

You are not self-employed, but TurboTax thinks you are because of the way you entered it on your return.

• Wages & Income
• Scroll to Other Common Income
• Select Income from a 1099-MISC
• Post your information from the form [Continue]
• Describe the reason for this 1099-MISC
• Post XXXX
• Does one of these uncommon situations apply?
• Select None of the above
• Did the XXXX involve work that's like your main job?
• No
• How often did you get income for XXXX?
• Check Got it in 2021
• Did the XXXX involve an intent to earn money?
• Answer No

If you do not follow this posting procedure it will result in self-employment.  You would also have to pay 15.3% in self-employment tax (Social Security & Medicare).