1099-MISC for health insurance

[jdoniach]

I received a 1099-MISC from my former employer (I'm retired) for the value of the health insurance plan for my partner (we are not married). Under "Describe the reason for this 1099-MISC" I have entered "nonemployee compensation".

This generates a Schedule C "Profit or Loss from Business". Is this really correct? And if so, how do I fill out the schedule C?

[MinhT1 · Accepted solution]

If you receive a form 1099-MISC for the value of a health insurance plan, then you are not considered as self-employed and do not need to file a Schedule C.

In TurboTax, enter your form 1099-MISC and follow the interview until you arrive at the page titled Did this involve an intent to earn money?. Answer that this did not involve an intent to earn money. The amount will be reported as Miscellaneous income and will not be subject to Self-employment tax.

In TurboTax, there is a work-around. Although you may receive this income every year, say that you only receive the 1099-MISC only in 2021, not in previous years and not in 2022, you will then have the screen where you can say that it did not involve an intent to earn money.

[jdoniach]

Is it possible to report this AS income and fill out a Schedule C? Doing so would allow me to contribute to a Traditional IRA and lower my taxes considerably.

[ColeenD3 · Accepted solution]

Unfortunately no. As @MinhT1 says, this is not self-employment income. There was no intent to earn money. There has to be services performed or products sold with a profit motive in mind. As you said, this is the value of the health insurance.