How do I report a special patronage dividend from my credit union which is non-profit? They send a 1099 Misc for $600 or more

[statar9012]

Should I just add it to total interest? When I enter it under 1099Misc it creates an EIC which seems wrong.

[JohnB5677]

Please clarify what the 1099-MISC is for?  A patronage dividend is generally reported on a 1099-PATR.

[statar9012]

The credit union distributes excess reserves to its members based on member's use of credit union services (accounts, loans, etc). No work is involved. It is not like a farm or other coop.  In the past I've just added it to interest earnings but since they will be issuing 1099-MISC for amounts over $600, I thought I should enter it there is it is even taxable.  Thanks.

[RaifH · Accepted solution]

Yes, it is taxable, and it should be entered as a 1099-MISC. If you enter it correctly, it should not impact the EIC as this is not earned income. To enter it in TurboTax, follow these steps:

1. Open or continue your return
2. Select the magnifying glass and search for 1099-misc. Select the Jump-to link
3. Answer Yes to Did you get a 1099-MISC?
   • If you already entered a 1099-MISC, you'll be on the 1099-MISC Summary screen, in which case you'll edit the 1099-MISC
4. Enter the info from your form into the corresponding boxes
   • I assume the patronage dividend is reported in Box 3. If it is reported in another box, the follow-up questions may differ.
5. Enter Patronage Dividend under Describe the reason for this 1099-MISC
6. Select None of these apply under Does one of these uncommon situations apply?
7. Answer No, it didn't involve work like my main job. to Did the back to work bonus involve work like your job?
8. Choose the year you got the dividend, 2021.
9. Select No, it didn't involve an intent to earn money.

The last question is a little confusing, but you were not in the business of getting collecting dividends. If you were to answer yes to this, it would treat it like self-employment income. This will be reported on your tax return as Other Income on Line 8z of Schedule 1. To preview your 1040:

1. Open or continue your return.
2. Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
3. With the Tax Tools menu open, you can then view your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu
4. Scroll down until you see Schedule 1 Line 8z.