Terminated by employer 2017; balance CA vacation pay unpaid until 2018. Late fees paid in 2018, 1099-MISC states income in Box 14 is Atty's fees; must claim on Schedule C. How do I avoid paying SE taxes because I was NOT self-employed. How and where do I enter this information?
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The 1099-misc with box 14 filled in for attorney fees should have been addressed to the attorney not you ... tell them they made a mistake and to correct it.
Wait a second ... are you just now filing a 2018 return ??? If so the issuer will not make the correction this late in the game so your only option is to made a line 21 "in and out" entry ....
Reporting this in TurboTax will be a two-step process, first to include the 1099-MISC as income and then to make a negative adjustment to remove it.
To include the 1099-MISC as a part of your tax return, follow these steps:
Now the income shown on the Form 1099-MISC has been added to your return. Next, it will be “removed” from the return.
Follow these steps:
We didn't receive employer's penalty payment until not quite three years ago. I believe the statute of limitations is still running; however, we do not expect employer to help. The payment declared on the 1099-MISC was the equivalent of 30-days' wages because employer refused to pay balance of vacation pay for almost a year. No attorney was involved. Had to sign waiver not to sue. Could not collect unemployment because wages were overstated, could not verify income. Took almost two years to straighten that out and could not file tax return until corrected W-2 was issued. Asked employer to pay penalty withOUT my going to CA agency to demand it. Mom died same time as forced retirement/layoff. Sister died, son murdered soon before. Dealing with audit, illness, and did not notice strange 1099 when it arrived in 2019. Playing catch-up. Tax-preparer wife also ill. Our understanding is that the penalty payment is taxable AND our questions are: (a) because I could not collect unemployment and also suffered LOTS of trauma dealing with bureaucratic nightmare of change in accounting firms at time of my termination and inability to get new firm to give me accurate accounting, we feel this payment should NOT be taxable, (b) instructions say to enter 1099-MISC income on Schedule C, which automatically brings up SE tax. I was NOT self-employed. Even if this payment IS income, I definitely do NOT want to pay SE tax on it, and (c) the way the software works, we do not get full credit for our new EV bought in 2018 AND we are not allowed to benefit from carry-forward of solar installation from 2017 because it appears that these two credits are not allowed to offset the new income and SE taxes. Final question: Does your reply below still hold? putting it in and then taking it out? (I sincerely hope so)! I am most grateful for your attention and expertise. Thank you.
BTW, this penalty payment was received in 2018, not 2019, if that makes a difference.
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