When I enter my NY family leave in Form 1099-MISC under Other Common Income, Turbo Tax incurs a 15.3% self employment tax. How do I correct this ?

[jamesbernardo]

I received a 1099-MISC for NY Family Leave pay that I received.  Turbo Tax is entering it as business income and I am incurring a 15.3% self-employment tax in addition to federal tax. My refund was reduced by $4439 on $11659 income.

[FangxiaL]

It should be reported as other income:

To report the 1099-Misc form as other income:

1. Open or continue with the return
2. Click on Show more next to Other Common Income under the Income & Expenses section
3. Click on Start/Revisit next to Form 1099-MISC 
4. Enter the information from the 1099-MISC form.
5. Select No, it didn't involve an intent to earn money. Otherwise, it is treated as self-employment income. See the screenshot below.

[jamesbernardo]

Thank You ! I think that worked

[jamesbernardo]

I'm sorry but when I completed my federal taxes, Turbo Tax is still showing a $247 Medicare tax for self-employment on $11659 NY Paid Family Leave.  This doesn't seem right.

[LenaH]

You must answer the questions that follow the entry screen for the 1099-MISC. On the screens that follow, you will also be able to get to the correct screen so that your 1099-MISC income will be allocated to Other Income correctly, rather than self-employment income. 

Please follow the instructions below:

1. Open or continue your return, if you're not already in it.
2. Search for 1099-misc and select the Jump-to link.
3. Edit your 1099-MISC.
4. Continue past the amounts already entered.
5. Describe the reason for this 1099-MISC.
6. Answer Does one of these uncommon situations apply?
7. Answer Did this involve work that's like my main job?
8. Answer How often did you get this income?
9. Answer Did this involve an intent to earn money?
10. Answer the remaining on-screen questions.

Next, please confirm your 1099-MISC went to Other Income on your 1040.

1. Click on Tax Tools on the left hand side.
2. Click on Tools.
3. Click on View Tax Summary.
4. Click on Preview my 1040 on the left hand side.
5. Search for Schedule 1 - Additional Income & Adjustments to Income.
6. A description of your Other Income and the amount should be listed in Line 8z. 

If a Schedule C was populated, please delete any Schedule C forms or associated self-employment forms in your return.

1. Search for Schedule C with the magnifying glass tool on the top of the page.
2. Select the Jump to Schedule C link in the search results.
3. Select No to the question Did you have any self-employment income or expenses? 
4. Click on Tax Tools on the left hand side.
5. Click on Tools.
6. Click on Delete a Form. 
7. Scroll down to your forms and look for Schedule C and Schedule SE and click Delete. 

@jamesbernardo

[jamesbernardo]

Thank You !

[kgaro113]

We had the same problem as OP did, but these answers weren't posted back in early Feb when I first did our taxes. I came back to them this evening and did the steps indicated by @FangxiaL & @LenaH and it definitely helped when I was allowed to say this PFL income wasn't income that we intended to earn (this choice literally wasn't there back on Feb 8). However, we are still owing $5671 in taxes on ~$18,460.72 in PFL income -- that's an effective tax rate of 30.72%. Our usual tax rate is 14-15% and our marginal tax rate should only be 22% at most, so something still seems wrong. Why are we being taxed so highly on this PFL income? Is it as wrong as it seems? How do I fix it?

[JamesG1]

Are you able to identify on what Federal form and line where the PFL income was reported?  Does your tax return include a Schedule SE Self-employment Tax?

View the tax return entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

[Edited 04/17/2022 7:52 AM PST]

@kgaro113 

[Catanzaro24]

Ss

[DaveF1006]

First of all, delete the entry you made completely. Make sure it's disappeared by going to the area where you made the entry. Then go to tax tools>tools>delete a form. Delete forms that have 1099 MISC, Schedule C , Schedule C worksheet. After this is done.

1. Log into your account
2. Select Wages and income>other income
3. Miscellaneous Income, 1099-A, 1099>start
4. Scroll to the bottom of the page to Other Reportable Income
5. Other taxable income, answer yes
6. Then give a brief description of the income and the amount listed.  You might give the description title 1099 MISC Reporting Paid Family leave.

[jmw61289]

This is not correct information. Followed your instructions to the letter and got to the point where you said to describe the income as "Paid Family Leave 1099" and the instructions on that page specifically say "Do NOT enter income reported on Form 1099-MISC".

[ThomasM125]

You can enter the Form 1099-MISC income in the Form 1099-MISC income entry section in TurboTax, you just need to be careful how you answer the questions there. Specifically, you need to say that the receipts are not associated with a job, the income was only earned in the current year, and there was no intent to earn money. @jmw61289