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posted Mar 11, 2023 8:18:26 AM

Should I report severance pay for a rescinded job offer using the 1099-NEC form I was provided, or file a replacement W2?

I had a job offer at a company, but then they rescinded the offer a week before I started (so I never actually worked there). Since the offer was rescinded, they payed me the equivalent of a month's salary as severance pay. They provided a 1099-NEC form to me to report this severance pay (presumably because I was never actually employed there), but the questions TurboTax is asking don't make sense for the situation (like asking me to describe what my self-employed business is). Should I file a replacement W2 instead?

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1 Best answer
Expert Alumni
Mar 11, 2023 8:43:32 AM

No, you will not include this as W2 income.  You should start the form entry anew by first deleting it.  Make sure you have deleted it from the "Self-employment" topic and the "Other Common Income" topic.  You can also use the "Delete a form" function in desktop versions in the forms mode or in online versions using these steps.

 

1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "Delete a Form"
4. Find the 1099-NEC 
5. "Delete"
6. "Confirm Deletion"

 

  1. After that Revisit the "Other Common Income" topic and use the "1099-NEC" topic.  
  2. Answer "Yes" and "Add a 1099-NEC"
  3. Fill in the ID information and box 1 amount
  4. Continue
  5. Describe as "Severance Pay"
  6. Select the category "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common)."
  7. Continue and Done

1 Replies
Expert Alumni
Mar 11, 2023 8:43:32 AM

No, you will not include this as W2 income.  You should start the form entry anew by first deleting it.  Make sure you have deleted it from the "Self-employment" topic and the "Other Common Income" topic.  You can also use the "Delete a form" function in desktop versions in the forms mode or in online versions using these steps.

 

1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "Delete a Form"
4. Find the 1099-NEC 
5. "Delete"
6. "Confirm Deletion"

 

  1. After that Revisit the "Other Common Income" topic and use the "1099-NEC" topic.  
  2. Answer "Yes" and "Add a 1099-NEC"
  3. Fill in the ID information and box 1 amount
  4. Continue
  5. Describe as "Severance Pay"
  6. Select the category "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common)."
  7. Continue and Done