topic Other Income in Get your taxes done using TurboTax

Other Income

Jimbo — Tue, 05 Mar 2019 17:04:39 GMT

Isabella G,

Thanks for responding!! The income comes from notes (example-Barclays Bank PLC MTN 6.9% that pay monthly coupon

payments. Coupon payments continue to be paid monthly or annually (depending upon the note) as long as the S&P does not

drop 20% from what the S&P was when you bought the instrument. These payments used to show as interest income on the brokerage 1099, but now they show as other income on the 1099. Should I be showing this income as something other than

"other"?

Thanks,

Jimbo

Re: Other Income

IsabellaG — Tue, 05 Mar 2019 19:04:31 GMT

Well, there's no way that this is Schedule C self-employment income. It still sounds like interest to me, unless there's some other component of the coupon payment that I don't understand. If the brokerage sent you the equivalent of a 1099-MISC, with box 3 filled in for "other" income, I'd report it as a 1099-MISC, but continue with TurboTax to say that it's interest on a note, that it doesn't involve work like your main job, that you got in 2018 (only check 2018) and that it does not involve an intent to make money. I know that sounds counter-intuitive, but that's how you get the income reported as Other income, not self-employment income. If this isn't on a 1099 equivalent (brokerage statements can be quite involved). I'd just report it as interest income. And I'd surely ask the brokerage the reason for the change.

Re: Other Income

Jimbo — Tue, 05 Mar 2019 22:15:46 GMT

Isabella G,

Yes, they show it as Other in box 3. I called the brokerage company and they said the IRS changed how to report that type of income.

As I mentioned earlier, the same thing happened with my in laws account and they have a different Brokerage Firm. I'll try and do what

you suggested. I'm just concerned that if I don't report it as shown, it'll raise a flag with IRS. Last year I just bit the bullet and paid the self employment taxes, etc. I look at it pretty much the same way you do though. Thanks so much for your help!!! I'd be interested to know if

anyone else has run into this situation. Let me know if you have any additional ideas.

Thanks Again,

Jimbo

Re: Other Income

IsabellaG — Tue, 05 Mar 2019 23:11:27 GMT

My instructions will have you reporting the income as shown on 1099-MISC with box 3. It's box 7, Nonemployee Compensation, that almost always counts as self-employment income, but "other income" is a different story. You definitely don't pay SE tax on that, and my instructions will make sure that you don't. Those questions in the interview are to help TurboTax decide if this is income from a business or side work, or if it's something else. This will not create a problem with the IRS.

Re: Other Income

Jimbo — Tue, 05 Mar 2019 23:24:09 GMT

Thanks Soooo Much Isabella G!!! I will follow those instructions and let you know if I have any problems. If that's ok with you?

Thanks Again!!!

Re: Other Income

IsabellaG — Thu, 07 Mar 2019 18:15:58 GMT

Great! You're welcome!

Re: Other Income

Jimbo — Sun, 10 Mar 2019 21:45:19 GMT

Hi Isabella G!!

Have another question for you. If during the year you received W-2's from various jobs but also received a 1099 for some side work you did, Can the 1099 income be considered Business Income? In Ohio you can deduct the first $250,000 of "Business Income" from your State Taxes.

Thanks,

Jimbo

Re: Other Income

IsabellaG — Sun, 10 Mar 2019 22:17:12 GMT

Yes, 1099 Nonemployee Compensation (Box 7) for side jobs is considered business income.

Re: Other Income

Jimbo — Sun, 10 Mar 2019 23:02:57 GMT

Thanks Isabella!! I thought so, but wasn't 100% sure.

Thanks Again,

Jimbo

Re: Other Income

Saineel — Fri, 15 Apr 2022 11:42:53 GMT

for 2021 taxes, I am encountering the same problem as reported by other taxpayer. Is it ok to treat the coupon payments as INTEREST?

thanks in advance

Re: Other Income

DianeW777 — Fri, 15 Apr 2022 12:34:57 GMT

it depends. If the income is reported on Form 1099-MISC you should report it using the steps below.

This income is not business income, rather miscellaneous as indicated by your Form 1099-MISC. It's your money making money for you and not because of a service you performed.

It's important for you to select 'None of these apply" and then you should also select the following:

Other Common Income > Form 1099-MISC
'No' on the screen 'Did the '____' involve work that's like your main job?'
'No' on the screen 'Did the '____' involve an intent to earn money?'

This will report the income without any business activity and it will show up on Form 1040, Line 8 (From Schedule 1, Line 8z).

@Saineel