My deceased husband employer issued a 1099-misc form to me How do i include this so it's not concern self employment income. My husband past 01/15/19 his employer issued the 1099-misc form to me because of unused vacation time, etc that was paid in 2/2/19

[jtax]

@LisaVee I am sorry for your loss. See if this previous answer helps you. Even though it is for a someone in your same situation where the payment was in a later year, I think probably applies to you. The key thing I think is that you have the 1099-MISC in your name,

https://ttlc.intuit.com/community/taxes/discussion/my-deceased-husband-employer-issued-a-1099-misc-f...

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[LisaVee]

Hi Jax,

the 1099-Misc is in my husband's name, but has my Social Security Number on it.  Should I consider this my income? and put my name in Turbo Tax?

I have read that the company should have taken out FICA & Med Care (and Futa) is that correct?

thanks for any help you can give.

LisaVee

[jtax]

Thank you for clarifying. 

Very odd to have his name and your SSN, but I wouldn't worry about it. That seems wrong.

is the amount on the 1099-MISC also including in your husband's W-2?  

See this IRS publication. Page 3 "Deceased employee's wages" ... they have a detailed example.

https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

What confuses me is that it says there should be a 1099-MISC (in your name not his) issued no matter what. But that if it is paid in the year of death, it should also be included in the W-2 and employment taxes withheld. If paid in a year after death, for some reason, there is no employee taxes paid and no W-2.

So if it was also in the W-2 then you want to be very careful that the income isn't double-counted. Not sure how to do that. Perhaps somebody else knows. Of if you find it is double counted as another again.

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[Opus 17]

When the company pays separation pay (bonus, accumulated vacation, and so on) they are supposed to treat it like regular income, subject to FICA, medicare, and federal and state withholding, and report it on a W-2. (Revenue Ruling 2008-29)

Since your spouse passed in 2019, you can and should file a joint return this year.  Be sure to check the box on your spouse's information page for "this person died during the tax year."  And incidentally, you won't be able to e-file, since his SSN is probably blocked.

I would report the 1099 under your spouse's name as your spouse's income.  Then, after entering the basic 1099 info, there is a page of special circumstances and one of those special circumstances is "this should have been on a W-2".  Turbotax will prepare a substitute W-2 form and a special form to collect the 7.65% employee share of medicare and social security tax rather than the 15% self-employment tax.  (The name and SSN mis-match will likely result in an IRS letter, that you should be able to answer by giving details of the situation.

(I might have a different answer if the payment was made in the year after your spouse's death, but since they both happened in 2019, I think the "should have been on a W-2" answer is the correct procedure.)

Or, you could ask the employer to rescind the 1099 and issue a proper W-2.  Depending on how smart they are and who does their payroll.

If this money was included in his W-2 AND you received a 1099-MISC for the same money, then you need a smarter expert than me.

[LisaVee]

I still do not have his W-2, so at this point I can't check that.    The way I read it is that the taxes should be included on the W-2, but the gross amount of the Unpaid Compensation payment should be included on the 1099-Misc and I should pay Federal tax on that amount.  However, Turbo Tax keeps wanting to throw it on a Sch-C which I do not think is right.  If I included the amount under my name it seems like that doesn't happen.

I will wait for his W-2 to see if it was included.  I do still have his last pay stub, so I can compare. 

Once I have all the information, If I have anymore questions I may contact you again.

Thank you for your help,

LisaVee

[LisaVee]

Thank you for the information,

The biggest problem I am having is finding a  person that can help me.  My Husband was a civilian working for DOD.  The check came from a centralized center and I can not get past customer service.  I need to speak with accounting.

It is very frustrating.  The 1099 doesn't have a phone number on it. 

[Opus 17]

It's also complicated because most payments made after death are counted as being made to the estate, not to you or to him.  I don't know enough about this area to give best advice, and the previous answer I saw from the person who would know, was a situation where the payment was made in a different tax year from the person's death, so the rules may be different.  I also don't know how filing a joint married return affects the "estate."

Certainly you don't pay tax twice, if the income is also on the W-2 the question is how to report properly so you don't pay twice.  If not on the W-2, this should be a payment to the estate and taxable there, not your income or his income.

Since you don't have the W-2, I think you should just slow down and wait.  There's plenty of time to analyze the situation.  Depending on the amount you may want to pay for proper advice from someone who works in this area.

@ScruffyCurmudgeon may know best, if he is still active.

[AmeliesUncle · Accepted solution]

This is what should be done:

• The 1099-MISC should have the amount in Box 3.
• As the surviving spouse who received the money, the 1099-MISC is correctly in your Social Security Number and should go on your tax return (it should probably have your name on it, but having his name on it won't hurt anything).
• The amount should have been added to Boxes 3 and 5 of his W-2 (Social Security and Medicare), but NOT Box 1 (taxable income).  Because of this, it is NOT taxed twice.
• You can enter it as "other income" on your tax return.

If the employer did that, everything is correct.