1099-Misc for contract fee for distribution of coupon interest from securities

[s-yama]

I read the Turbo Tax posts for entering this 1099-Misc without triggering a Schedule C for business income (I do not own a business).  I followed the steps and this worked for my federal return, but it triggered a Schedule C for my Hawaii state tax return.  It's asking for Hawaii Business Tax ID (I do not own a business). What do I do?

[JamesG1]

I created a Hawaii state tax return with 1099-MISC income reported as other income on line 8z on Schedule 1 Additional Income and Adjustments to Income.  Other income is reported on line 9 of the Federal 1040 tax return.

I followed these steps to report income on an IRS Form 1099-MISC.

• Select Federal from the left side menu.
• Click on Wages & Income.
• Scroll down to Other Common Income.  Click Show more.
• Click Start / Revisit to the right of 1099-MISC.
• Enter a description under Describe the reason.
• Select 'None of these apply' at the screen Does one of these uncommon situations apply?
• Select 'No' at the screen Did the income involve work.
• Select 'No' at the screen Did the income involve an intent to earn money?

In the Hawaii state income tax return, I am not receiving a message to report the income as Schedule C income.

What message are you receiving?  Please clarify.

@s-yama 

[s-yama]

Thank you for your response.  In the Hawaii State return section, it takes me to a page that says "Hawaii Business Summary" where I have to enter a Hawaii Business Tax ID or gross receipts for a business.  It has my name under "Name of Business" and GE under "Hawaii Tax Code." 

I'm wondering if this was triggered because on the Federal return I indicated the 1099-Misc as a contract fee (which is what was stated on the 1099-Misc form) in the description.  The federal form did not ask me anything about a business.   By the way, I'm using the Deluxe desktop version of TurboTax. 

I may have to do a new form and start all over again.

[AliciaP1]

You will need to delete your Form 1099-MISC entry and re-enter it as Other Reportable Income.

To do this in TurboTax Deluxe Desktop you can follow these steps:

1. Within your tax return, under the Federal Taxes tab and Wages & Income, click I'll choose what I work on
2. Scroll down to the 1099-MISC and Other Common Income section and click Update for Income from 1099-MISC
3. Use the trash can icon to delete your 1099-MISC
4. On the Your 2022 Income Summary screen scroll down to the Less Common Income section and click Start for Miscellaneous Income, 1099-A, 1099-C
5. Scroll down and click Start for Other reportable income
6. Enter your contract fee and amount here
7. Click on the Federal Review tab and review your federal return
8. Go back through your state return interview by clicking Edit on the Your State Return screen

@s-yama 

[s-yama]

I followed your instructions to delete the 1099-Misc and put it under "other reportable income"  but I still get the Hawaii Business Tax questions on my state tax return.  I will try to create a new form and start again.  Thanks for your help anyway.

[TeresaM]

Since the problem was showing in the state form, it may help to clear just the state form and let it pull in fresh data from the federal return, now that you have the Form 1099-MISC corrected in the federal. 

In the Desktop version of TurboTax, go to the top menu bar and click on File, then scroll down to Remove State Return.  Then you can return to the State Taxes tab, at the top, and open Hawaii again with new data. 

[s-yama]

I deleted the State form, but that did not resolve the issue.  I just began a new federal form and proceeded from the beginning.  That seemed to resolve the issue.  It took me through the State form with no problems.