1099 MISC for deceased spouse's accrued vacation--SSI and Medicare taxes already paid

[rac123]

So my wife died in August.  She was an employee of NY state.

I got in separate payments from NY state my wife's final paycheck and her cashed out vacation time.  There was a single 1099 to cover these.

Here's the wrinkle:  the SSI and Medicare taxes were withheld on these, but they appear on her W2 as SSI/Medicare taxable income.   So, there should be no need to pay SSN and Medicare tax on these again.

Just to be clear--the taxes paid on this income IS reflected on her W2.

But Turbotax doesn't seem to allow me to account for this.  How do I indicate that SSI and Medicare taxes WERE paid on the amount I received per the 1099?

[ee-ea · Accepted solution]

Enter it in the personal section, Other Common Income Form 1099-MISC.  To ensure it does not go to Schedule C (self-employment), you will answer the follow-up questions accordingly. 

On the Describe the reason for this 1099-MISC screen, enter a description of the other income. (IRD)

Select None of these apply on the Does one of these uncommon situations apply? screen.

Select No, it didn’t involve work like my day job on the Did the involve work that's like your main job? screen.

Select I got it ONLY in 2023 on the How often did you get income for? screen.

Select No, it didn’t involve intent to earn money on the Did the work involve an intent to earn money? screen.

Answering differently to any of these questions will imply self-employment and generate Schedule C.  

What does the IRD stand for?

Income in respect of a decedent (IRD) refers to untaxed income that a decedent had earned or had a right to receive during their lifetime..  IRD is taxed as if the decedent is still living.  Beneficiaries are responsible for paying taxes on IRD income under most circumstances.

[rac123]

Thanks, that did the trick!  TurboTax could probably do more to make this apparent because I know employers will issue 1099Cs for some dumb  reason, but no longer a worry for me.

Thanks again!