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becky5000
Level 2

1099 Misc from Financial Institution

I received a 1099 Misc for the first time this year from my financial institution. When I asked them about it, I got the following response. 

1. An "Investment and Infrastructure Support Fee" is charged each quarter to clear mutual fund trades.

2. The mutual fund company reimburses a large portion of the fee and calls it "Investment and Infrastructure Support Credit".

 

In 2019, the credit ended up being $32 greater than the fee thereby resulting in the 1099 Misc. This is reported in Box 3 as other income. It is the only box with an entry.

 

How do I report this in TurboTax, i.e., how do I answer the questions?

Thanks

1 Best answer

Accepted Solutions
becky5000
Level 2

1099 Misc from Financial Institution

1. I deleted the 1099 Misc and Sch C. Then I hand input the 1099 Misc and answered the questions, it added Sch C again.

 

2. I decided to start from scratch and started my entire return over by transferring last years info. Then I imported the tax info from my financial institution. Then I went to the 1099 Misc section and answered the questions. Same result, it created a Schedule C.

 

3. So then I went back to my original return and deleted Schedule C and ran the Review to see what it would do. It said the 1099 Misc had to be associated with Schedule C, Schedule F, Form 4835 or the Other Income Statement. I clicked on the forms button and it brought up the 1099 Misc and told me to check the place where this income should be reported. I checked the Other Income box, reran Review and everything was happy. Out of curiosity I went back to the 1099 Misc section in Easy Step and all the other situations are covered in one of the questions but not the generic other income.

 

Anyway, thanks for your suggestion to delete Schedule C which prompted me to delete it and run the error check.

View solution in original post

7 Replies
Opus 17
Level 15

1099 Misc from Financial Institution

It’s not work, or like work, or done with the intent to make a profit.  This should end up as other income, not self employment.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
becky5000
Level 2

1099 Misc from Financial Institution

I went back and checked all my answers in TurboTax.

TurboTax created a Schedule C - Profit or Loss from Business.

Do I need to file a Schedule C? Or do I need to delete something in TurboTax and start over?

 

When I look at the form for Schedule C, there are several unanswered questions.

Is this activity a qualified trade or business under Section 199A? I assume No.

B. Enter principal business code - it suggested 999,999 if none.

C. Business Name

F. Accounting method - cash, accrual, other?

G. Did you "materially participate" in the operation of the business in 2019? I assume No.

I. Did you make any payments in 2019 that would require you to file Form(s) 1099?

Opus 17
Level 15

1099 Misc from Financial Institution

This should not have a schedule C.  Since the income was in box 3, it should have gone in as other income, not self employment.  You must have answered the test questions as if this was self-employment.  Depending on the version you are using, I would delete the 1099 itself and delete the entire schedule C business if you can.  Then re-enter the 1099 and pay attention to the testing questions. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
becky5000
Level 2

1099 Misc from Financial Institution

1. I deleted the 1099 Misc and Sch C. Then I hand input the 1099 Misc and answered the questions, it added Sch C again.

 

2. I decided to start from scratch and started my entire return over by transferring last years info. Then I imported the tax info from my financial institution. Then I went to the 1099 Misc section and answered the questions. Same result, it created a Schedule C.

 

3. So then I went back to my original return and deleted Schedule C and ran the Review to see what it would do. It said the 1099 Misc had to be associated with Schedule C, Schedule F, Form 4835 or the Other Income Statement. I clicked on the forms button and it brought up the 1099 Misc and told me to check the place where this income should be reported. I checked the Other Income box, reran Review and everything was happy. Out of curiosity I went back to the 1099 Misc section in Easy Step and all the other situations are covered in one of the questions but not the generic other income.

 

Anyway, thanks for your suggestion to delete Schedule C which prompted me to delete it and run the error check.

View solution in original post

JoeRJGR
New Member

1099 Misc from Financial Institution

The program automatically makes anything entered as 1099 Mic - some type of self employment.  is the only way to fix this is to do so on the tax form itself?

Opus 17
Level 15

1099 Misc from Financial Institution

@JoeRJGR 

When you enter a 1099-MISC you are asked a series of test questions. These are mandated by the IRS and are used to determine whether this income was earned from working.  I don’t have the exact questions handy but they are something like, “Did you intend to earn money?”, “Did you do similar work last year or will you do similar work next year?”  You have to answer no to all of these types of questions to avoid treating the 1099 as self-employment income.  While you may intend to earn interest in the general sense of the term “earn”, and you certainly hope to earn interest in the future, it is not income earned from working, which has a particular meaning in the tax code.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
becky5000
Level 2

1099 Misc from Financial Institution

When I did my tax return this year, I did not have an issue with the 1099 Misc. I guess the setup transferred from last years return. 

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