1099 Misc - Non Accountable Car Allowance Plan

[DBernard]

Hi, I receive a monthly car allowance under a non-accountable plan and received a 1099-MISC.  The allowance paid is shown on Box 3 - I'm having issues with Turbotax categorizing the income as self-employment income and noting that I will receive a W-2C to capture the deferred SS taxes.  I haven't experienced this issue in the past, any info / guidance is greatly appreciated.   Thanks!

[Opus 17]

All monies paid by your employer for your services must be reported on your W-2, even this allowance.  Your employer is, through ignorance or intent, avoiding their responsibility to pay employment taxes, unemployment insurance and other requirements on these wages.  You should ask them for a corrected W-2.  

If they refuse, enter the 1099-MISC and check the box on the page of special circumstances that says something like “this money was paid by my regular employer and should have been on my W-2”.  TurboTax will prepare a form 8919 and you will pay 7.65% social security and Medicare tax that should have been withheld, but you won’t pay 15% self employment tax.  

[Hal_Al]

As the other reply said, your employer has handled this wrong.  The income should have been added to your W-2. FICA (social security & medicare) tax should be paid on this income, which means you should treat it as self employment or go back to your employer for corrective paper work. 

That said, the key to getting TT to treat it as other income is to follow these steps (this is probably what you did in the past):

Enter the 1099-Misc

On the next screen Describe what the payment was for

On the next screen select "none of these apply"

On the next screen select "No it didn't involve work like my main job"

On the next screen select "I got it in 2020" ONLY

On the next screen select No, it didn't involve intent to earn money

TT will put the amount on line 8  of Schedule 1 as other income

[Opus 17]

@Hal_Al  You know that’s not right. It’s not “other income”, the taxpayer needs to file form 8919 with code H.  This most often occurs with tipped workers but is also required in this case.  

https://turbotax.intuit.com/tax-tips/small-business-taxes/what-is-form-8919-uncollected-social-secur...

https://www.irs.gov/pub/irs-pdf/f8919.pdf