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Level 1
posted Jun 10, 2020 11:03:07 AM

"Payment In Lieu of Medical Coverage" on 1099-MISC

My wife and I are retired; 2019 returns are our first while in retirement. We file jointly. In addition to a pension, my wife receives "payment in lieu of medical coverage" from her former employer. This is a quarterly payment to her that is equal to the cost of a medical insurance plan she's not eligible to receive because we no longer live in the same state as her former employer. These payments were reported on a 1099-MISC and no Federal income taxes were withheld.

 

When I enter the 1099-MISC data as part of Easy Step, it's treated as if it's business income. Is this correct?  If not, how do I correctly enter this income?

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1 Best answer
Level 15
Jun 10, 2020 1:59:55 PM

The payment should not be treated as business income. It's "other income." 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 with the description "Other Income from box 3 of 1099-Misc."

 

  • Enter "1099-misc" (without the quotes) in the Search box. Then click the link that says "Jump to 1099-misc."
  • The first 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 "Medical payment." 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 Medical payment involve work that's like your main job?" - Select No and click Continue.
  • "How often did you get income for Medical payment?" - "I got it in 2019" will already be checked. Don't check any of the other boxes. Just click Continue.
  • "Did the Medical payment involve an intent to earn money?" - Select No and click Continue.

 

4 Replies
Level 15
Jun 10, 2020 1:30:03 PM

Which box of the 1099-MISC is the income in?

Level 1
Jun 10, 2020 1:34:52 PM

The entire amount received is shown in box 3 of the 1099-MISC my wife received. 

Level 15
Jun 10, 2020 1:59:55 PM

The payment should not be treated as business income. It's "other income." 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 with the description "Other Income from box 3 of 1099-Misc."

 

  • Enter "1099-misc" (without the quotes) in the Search box. Then click the link that says "Jump to 1099-misc."
  • The first 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 "Medical payment." 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 Medical payment involve work that's like your main job?" - Select No and click Continue.
  • "How often did you get income for Medical payment?" - "I got it in 2019" will already be checked. Don't check any of the other boxes. Just click Continue.
  • "Did the Medical payment involve an intent to earn money?" - Select No and click Continue.

 

Level 1
Jun 10, 2020 6:22:56 PM

Thanks! That did it. I deleted the 1099-MISC I'd already entered and the Schedule C that was created after it was flagged for missing data when I ran error check. 

 

Your help is very appreciated!