1099 misc form /FICA question

7 replies
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i received 1099 misc form from an investor (not my employer) for my assistance with the sale of a company. the income is in box 3. therefore no FICA. is this correct?

rjsAnswer

Level 15

thanks again. to be crystal clear. the 1099 misc was box 3. and i was told there are not self employment taxes associated with this. you have stated if less than $400 there are none but this payment was $100k. please advise.

@pfeifwa1 wrote:

the 1099 misc was box 3. and i was told there are not self employment taxes associated with this.

@pfeifwa1

Who told you that? "Was told" is never a good source of tax advice. This whole situation sounds like someone is trying to help you cheat on your taxes.

It looks like the 1099-MISC is improper. You were paid for services that you provided. That is unquestionably self-employment, and is subject to self-employment tax. Form 1099-MISC box 3 is not supposed to be used for payment for services. The payer should have issued a 1099-NEC, not a 1099-MISC.

The simplest way for you to handle it is to simply report the 1099-MISC income as self-employment income. Then at least your tax return will be correct.

I gather that you are talking about a payment that you received in 2022. If so, it's too late to make an estimated tax payment to cover the tax on it. Just file your 2022 tax return and pay the tax due.

Because of the amount of money involved, you might want to consult a local tax professional, rather than relying on anonymous advice that you get on the internet.

DoninGA

Level 15

Income received from a client is not subject to FICA taxes.

DoninGA

Level 15

However, if the amount is $400 or more then you have to report the income on Schedule C as self-employment income. The net self-employment income is subject to Self-Employment taxes which is the employer and employee portion of Social Security and Medicare taxes.

pfeifwa1Author

Level 2

thanks Donin. it was more than $400. $100k. so am i reading your reply correctly by stating that if less than $400 it is not subject to FICA but if more than $400 it is subject to FICA?