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posted Jun 4, 2019 1:05:23 PM

1099-misc for severance pay?

I received a 1099-Misc from a former employer, and I believe it's for severance pay I received after being laid off from the job. How is this taxed?

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1 Best answer
Level 15
Jun 4, 2019 1:05:24 PM

Severance pay is taxed the same as wages. The employer reported it incorrectly. It should have been included it in your W-2, not on a 1099-MISC. However, there is a way to report the severance pay correctly on your tax return, in spite of the employer's error.

I assume that the employer reported the severance pay in box 7 of the Form 1099-MISC, and that you also received a Form W-2 for 2015 from the same employer. Here's how to enter the 1099-MISC in TurboTax.

  • Click the Federal Taxes tab.
  • Click Wages & Income.
  • Click "I'll choose what I work on" or "Jump to a full list."
  • On the screen "Your 2015 Income Summary," scroll down to the section "1099-MISC and Other Common Income." Click the Start button for "Income from Form 1099-MISC."
  • The next screen asks if you received a Form 1099-MISC, click Yes.
  • On the next screen, enter all the information from the 1099-MISC. If you are filing a joint return, be sure to select the correct person at the top. Click Continue.
  • The next screen asks for the reason for the 1099-MISC. Enter "Severance pay" and click Continue.
  • The next screen asks "Does one of these uncommon situations apply?" Select "My employer reported this extra money on a 1099-MISC but it should have been reported on a W-2." Click Continue.
  • On the next screen, "Filing Form 8919," select the third choice, "I received a Form W-2 and a Form 1099-MISC, but all the income reported on this Form 1099-MISC should have been included on my Form W-2 from {your employer}." Click Continue.
  • On the next screen, "Wages Not on Form W-2," click Continue.
  • On the next screen, "Report as Wages," click Continue.

The severance pay will be included in the total wages on Form 1040 line 7. On the dotted line to the left of the amount on line 7 there will be a notation "F8919" and the amount. Form 8919 will be included in the return, with reason code H in column (c). Form 8919 will calculate the Social Security and Medicare taxes that your employer should have withheld from the severance pay. The total of these taxes will appear on Form 1040 line 58 and will be included in your total tax liability.

2 Replies
Level 15
Jun 4, 2019 1:05:24 PM

Severance pay is taxed the same as wages. The employer reported it incorrectly. It should have been included it in your W-2, not on a 1099-MISC. However, there is a way to report the severance pay correctly on your tax return, in spite of the employer's error.

I assume that the employer reported the severance pay in box 7 of the Form 1099-MISC, and that you also received a Form W-2 for 2015 from the same employer. Here's how to enter the 1099-MISC in TurboTax.

  • Click the Federal Taxes tab.
  • Click Wages & Income.
  • Click "I'll choose what I work on" or "Jump to a full list."
  • On the screen "Your 2015 Income Summary," scroll down to the section "1099-MISC and Other Common Income." Click the Start button for "Income from Form 1099-MISC."
  • The next screen asks if you received a Form 1099-MISC, click Yes.
  • On the next screen, enter all the information from the 1099-MISC. If you are filing a joint return, be sure to select the correct person at the top. Click Continue.
  • The next screen asks for the reason for the 1099-MISC. Enter "Severance pay" and click Continue.
  • The next screen asks "Does one of these uncommon situations apply?" Select "My employer reported this extra money on a 1099-MISC but it should have been reported on a W-2." Click Continue.
  • On the next screen, "Filing Form 8919," select the third choice, "I received a Form W-2 and a Form 1099-MISC, but all the income reported on this Form 1099-MISC should have been included on my Form W-2 from {your employer}." Click Continue.
  • On the next screen, "Wages Not on Form W-2," click Continue.
  • On the next screen, "Report as Wages," click Continue.

The severance pay will be included in the total wages on Form 1040 line 7. On the dotted line to the left of the amount on line 7 there will be a notation "F8919" and the amount. Form 8919 will be included in the return, with reason code H in column (c). Form 8919 will calculate the Social Security and Medicare taxes that your employer should have withheld from the severance pay. The total of these taxes will appear on Form 1040 line 58 and will be included in your total tax liability.

Level 1
Feb 2, 2020 2:55:33 PM

Hi I didn’t get a W-2 from previous employer as I was negotiating a severance for over a year later. How do I report the severance I finally got that employer sent as 2099-Misc-income as severance? When I did what was suggested Turbo Tax is telling me to file a SS-8? And send to IRS.