Yes, this is taxable income. The 1099-MISC is income paid in respect to the decedent. Since this was reported on a 1099-MISC, as it should have been according to the IRS Pub 559 (p. 14-15), this is added as other income on your tax return.
Wages. The entire amount of wages or other employee compensation earned by the decedent but unpaid at the time of death is income in respect of a decedent. The income isn't reduced by any amounts withheld by the employer. If the income is $600 or more, the employer should report it in box 3 of Form 1099-MISC, Miscellaneous Income, and give the recipient a copy of the form or a similar statement. Wages paid as income in respect of a decedent aren't subject to federal income tax withholding.
To enter the 1099-MISC as income that is not self-employment income, follow these steps in TurboTax Online:
- In the Federal section, under Your income and expenses
- Scroll to Other Common Income
- Select Form 1099-MISC
- Follow the Prompts and enter amount in Box 3, Continue
- Describe the reason for this 1099-MISC box
- Do any of these uncommon situations apply? check last box
- Select No, it didn't involve work like my main job on Did the income in respect of a decedent involve work that's like your main job?
- Answer How often did you get income...Although you may receive this income every year, say that you only receive the 1099-MISC only in 2022, not in previous years and not in 2023, you will then have the screen where you can say that it did not involve an intent to earn money.
- Select No on Did the income in respect of a decedent involve an intent to earn money?
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