1099-Misc Box 3

[calvinsia]

I have TurboTax Home & Business 2019 and received a 1099-MISC with only box 3.

After I completed filling out everything in "Personal" under "Income from Form 1099-MISC", the Smart Check finds errors that need to be corrected, and once I correct everything.   I find that my 1099-MISC was filled out under "Business" and "Personal" so it's entered two times for me.  I don't have a business and I'm not self-employed either.  Only Box 3 is filled on my 1099-MISC and it was due to a settlement for unpaid wages that I received from a previous employer.

The Smart Check wants me to fill out the Schedule C which makes me enter my "business" information, but again I don't own a business and I'm not self-employed.  I feel like this is error in the TurboTax software.  Any advice would be greatly appreciated.  

[Irene2805]

Delete the 1099-MISC and then re-enter it according to these instructions below.

Step 1.  Delete the 1099-MISC.

1. Go into Forms Mode by clicking on the Forms icon in the top right of the blue bar. 
2. In the Forms in My Return list on the left, click on the form you wish to open and delete.
3. Click on the Delete Form box at the bottom of the screen.
4. To return to the interview, click on the Step-By-Step icon in the top right of the blue bar.  

Step 2.  Reenter the 1099-MISC.

You can enter the 1099-MISC in TurboTax as "Other Common Income," which is reported on line 8 of 1040 Schedule 1 and will not generate Schedule C or SE tax.  Please use the following steps:

1. Click on Federal > Wages & Income.
2. Scroll down to the Other Common Income section. 
3. Click on the Start/Revisit box next Form 1099-MISC. 
4. On the screen Did you get a 1099-MISC?  click on the Yes button.
5. On the next screen, Let's get the info from your 1099-MISC, enter the information from the 1099-MISC.
    
6. On the following screens, answer the following questions:
   • Did it involve work that's like your main job? No.
   • You got it in 2019
   • No, it didn't involve an intent to earn money

 7.  Continue through the rest of the interview screens. The income will appear as Other Income.

[calvinsia]

Thank you!  This fixed my issue.

[wjordan]

Does the taxpayer (user) incur SE tax using this method to enter the 1099-MISC?

[ColeenD3]

@wjordan

No, properly entering Box 3 amounts do not trigger SE taxes.

[marvh3]

Thank You.  Very Helpful

[lauriofam5]

Irene,

Great job answering this question.  I love the easy-to-read, outlined instructions to do this.  I received an amount of $2.70 that came as "other income" reported on box 3 of a 1099.  

After reading your post I found that TurboTax imported it correctly into the Other income section before I  entered it erroneously a "business income."  

Problem solved, thanks!

Angel

[sbalasub]

In the 2021 version, the 1099-Misc income is triggering a schedule C. I followed the instructions above. 

The 1099-Misc income was reported by an Investment brokerage firm. 

How do I avoid reporting the Misc income without reporting it on Schedule C. ?

[DaveF1006]

It depends on how you answer the questions. You must be careful.

1. Log into turbo tax
2. Go to federal>wages and income>other common income
3. Form 1099-MISC>revisit
4. Select edit next to the 1099-MISC
5. Scroll through the entry and then the program will ask Describe the reason for the 1099-Misc 
6. As you move through the screen, the program will ask if this is like your main job.  If you say yes, it will expect you to fill out a schedule C. For this purpose, say no.
7. Next it will ask how often did you receive this income. If this was the first year you received it, indicate so.
8. Now it will ask you if you have the intent to earn money.  Indicate no.
9. if this is done correctly, it will not ask for a Schedule C because this will appear as OTHER INCOME in line 8 Schedule 1 in your return.

[lildawg14]

Hello, your instructions for reporting box 3 of a 1099-MISC is what I needed to do a few years ago and I can confirm that it worked correctly for me then. However, for my 2021 tax return I have needed to do this again (PhD fellowship) and those same steps are resulting in the same federal tax due when I include it as a W2. Was there a change to the TurboTax Software?

[KrisD15]

If the fellowship is taxable income, it would be reported as "Earned Income" on Line 1 of your 1040, which is the same as income reported on a W2. 

Is there more to your situation? Should this be tax-free for some reason? 

According to the IRS:

"Whether you must report your scholarship or fellowship grant depends on whether you must file a return and whether any part of your scholarship or fellowship grant is taxable. If your only income is a completely tax-free scholarship or fellowship grant, you don't have to file a tax return and no reporting is necessary. If all or part of your scholarship or fellowship grant is taxable and you are required to file a tax return, report the taxable amount as explained below. You must report the taxable amount whether or not you received a Form W-2. If you receive an incorrect Form W-2, ask the payer for a corrected one. For information on whether you must file a return, see Pub. 501, Dependents, Standard Deduction, and Filing Information, or your income tax form instructions.

How To Report How you report any taxable scholarship or fellowship grant income depends on which return you file. Form 1040 or 1040-SR. If you file Form 1040 or 1040-SR, include the taxable amount in the total on line 1. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 1."

IRS PUB 970

[ashahpatel80]

Hello

I have the same situation. I received 1099-Misc with amount in Box-3 from my previous employer.This amount is for settlement of  unpaid commission for a project bid. I was working as a project estimator .

Do i need to follow same steps as mentioned in Step#2 ?

What about question -Did it involve work that's like your main job? ...should i answer NO ?( I think that its the same work like main job.)

What about intent to earn money ? ----is it not intent to earn money ?

Please help

[ThomasM125]

You should follow the instructions mentioned in Step #2. Namely, report the income in the Other Common Income section of TurboTax and then choose the Form 1099-Misc entry.

You should answer that the income is related to your job and was involved with an activity on which you wanted to earn a profit. As such, it will correctly be reported as self-employment income subject to self-employment (social security) tax.  

@ashahpatel80

[yoshl]

I'm having this same issue. How did you get around this?

It's annoying that TurboTax automatically assumes 1099-misc even if it's just a Box 3 entry is for a business and includes it as Business Income subject to SE tax. 

[Hal_Al]

Enter the 1099-Misc

On the next screen Describe what the payment was for

On the next screen select "none of these apply"

On the next screen select "No it didn't involve work like my main job"

On the next screen select "I got it in 2021" ONLY (even if you get/got it in other years, this is a necessary workaround for the no intent to earn money situation)

On the next screen select No, it didn't involve intent to earn money

TT will put the amount on line 8z  of Schedule 1 as other income