1099-MISC state/arpa educator bonus misclassified as self-employment

[frankeye]

In 2022 Rhode Island initiated an Early Educator Pandemic Retention Bonus program, using its ARPA (Rescue Plan Act) funds to incentivize Pre-School and Childcare workers to remain on the job.  Their agent (a private company) issued a 1099-MISC form.  I receive a normal employee W-2 for this early education job. 

I'm using TT Premier online and attempt to enter this 1099-MISC under the Other Common Income section, but TT keeps characterizing this income as self-employment, runs me through the self-employment questionnaire and wants to subject this to self-employment tax.  I can't see how to disabuse TT of this mistaken treatment. 

(P.S.:  This State program clearly indicates these bonuses are subject to Fed and State taxes (i.e. this: https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers does not apply/waive).  

[AliciaP1 · Accepted solution]

You need to identify that the 1099-MISC "did not involve work like my main job" and that you got it in 2022 and no other years (even if you did) so TurboTax will recognize the income as other income instead of self-employment income.

To correct your 1099-MISC entry in TurboTax Online you can follow these steps:

1. Within your return, click on Tax Tools in the black menu on the left side of the screen.
2. Click on Tools.
3. Click on Delete a Form. 
4. Scroll down to your form and click Delete.
5. Under Federal in the black menu bar click Wages & Income to get back into your tax returns.
6. Open or continue your return
7. Select the magnifying glass and search for 1099-misc. Select the Jump-to link
8. Answer Yes to Did you get a 1099-MISC?
   • If you already entered a 1099-MISC, you'll be on the 1099-MISC Summary screen, in which case you'll select Add Another 1099-MISC
9. Enter the info from your form into the corresponding boxes
   • If you need to enter boxes 4–6 or 8–17, check My form has other info in boxes 1–17 to expand the form
10. Continue answering the following questions until you get to the Did the bonus involve work that's like your main job? screen and answer No
11. Continue and answer I got it in 2022 on the How often did you get income for bonus? screen
12. Continue and answer No on the Did the bonus involve an intent to earn money? screen and Continue
13. If you have another 1099-MISC you can enter it or answer No and Continue
14. Proceed entering/reviewing your return

[frankeye]

Thanks, that seems to work, although the on-screen instructions 'Did the bonus involve work that's like your main job? screen' with the guidance to answer YES if it IS your main job is obviously wrong/misleading.