1099-MISC

[clion6465]

My husband recieved a 1099- MISC for out of work payment it wasn't a business and turbo tax is entering it as a business and making me answer questions like it was a business. 

[ToddL99]

By "out of work" payment, what do you mean? Did the payment come from his former employer?

[clion6465]

He works for the railroad and pays money monthly to a company who will pay him if he is taken out of service for a reason they deem payable. It’s private insurance he pays for in case of suspension from work. He was paid one time this year by the company and they sent him a 1099 -misc form. I am trying to enter it into turbo tax and it is making me answer questions like this was business earnings when I do the smart check. So frustrated ????

[ToddL99]

If he personally paid the premiums (with after-tax dollars) for an unemployment insurance policy, then any benefits he was paid are not be taxable.

The rules surrounding taxation of individual insurance benefits are generally simple. If  you paid the premiums with after-tax dollars and did not claim a deduction for those payments, the benefits you receive are tax free.  

You will have to report the 1099-MISC in a way that will not trigger "business" income (Schedule C) and self-employment taxes. The IRS will be expecting to see that income on his return. Then, you will have to enter an offsetting adjustment to remove the amount from you taxable income.

Enter the 1099-MISC information as follows in the 1099-MISC interview:  

• Enter the 1099-Misc in the Other Common Income  section (Enter "1099 misc" in the Search Box and Select "Jump to 1099 misc form")  

• For "Description", enter "Employment Insurance Benefit"  

• Also check that it  does not  involve work like your main job, that it  did  not  involve an intent to make money, and is not a recurring payment (received in the past or expected in the future) (these questions only apply to income he earned from working, not an insurance pay-out).  

• The income will be reported on line 8 of Form 1040 of your return (Other income from Schedule 1, Line 9).  

To enter the "offsetting adjustment":  

• Go to Less Common Income, Miscellaneous Income and Other reportable income. Enter "Lawsuit settlement" in the Search Box and Select "Jump to lawsuit settlement" "to get to this screen 

• Continue to the screen "Other Taxable Income". Enter the description as "Non-taxed Employment Benefit" and the amount as a negative number. Entering "-$ XXXX" here will offset the benefits included on the Form 1099-MISC. These are NOT wages.  

A corresponding negative amount will be entered, and line 8 of Schedule 1,  will be zero. 

[clion6465]

Thank you, I did all that and now it’s saying I have areas that need to be checked. It asks if I am required to file a 1099??? I don’t know. Also asked do you ‘materially participate’, I don’t know . 

[clion6465]

I really need an answer to the above question, can anyone help? 

[clion6465]

It is also asking for a business code, I don't have a business code. 

[ToddL99]

The program is asking questions that apply to a business, i.e. Schedule C, Profit or Loss from Business - your husband's payments were not related to a business operation, For this reason he could not/did not materially participate, was not required to file 1099s and did not have a business code.

To correct this and properly report the 1099-MISC, you will have to remove the business-related forms (Schedule C and any associated worksheets that might have been created) from your return, to include the 1099-MISC that is feeding into Schedule C.  

See: How do I delete forms in TurboTax Online? 

After removing those forms, you will have to re-enter the 1099-MISC in a way that will not trigger "business" income (Schedule C) and self-employment taxes. The IRS will be expecting to see that income on his return. Then, you will have to enter an offsetting adjustment to remove the amount from you taxable income.

Enter the 1099-MISC information as follows in the 1099-MISC interview:  

• Enter the 1099-Misc in the Other Common Income  section (Enter "1099 misc" in the Search Box and Select "Jump to 1099 misc form")  

• For "Description", enter "Employment Insurance Benefit"  

• Also check that it  does not  involve work like your main job, that it  did  not  involve an intent to make money, and is not a recurring payment (received in the past or expected in the future) (these questions only apply to income he earned from working, not an insurance pay-out).  

• The income will be reported on line 8 of Form 1040 of your return (Other income from Schedule 1, Line 9).  

To enter the "offsetting adjustment":  

• Go to Less Common Income, Miscellaneous Income and Other reportable income. Enter "Lawsuit settlement" in the Search Box and Select "Jump to lawsuit settlement" "to get to this screen 

• Continue to the screen "Other Taxable Income". Enter the description as "Non-taxed Employment Benefit" and the amount as a negative number. Entering "-$ XXXX" here will offset the benefits included on the Form 1099-MISC. These are NOT wages.  

A corresponding negative amount will be entered, and line 8 of Schedule 1,  will be zero. 

[DA60]

I have a 1099 that is not business related. How do I enter it so it does not think I am a business?

[npierson7]

You can report it as Other Income. Follow these steps to enter it in TurboTax:

Federal Taxes -> Wages & Income -> I'll choose what I work on -> Scroll to the bottom and under Less Common Income select Start (or Update) for Miscellaneous Income. You can enter your 1099-MISC information there.