Executor fee miscategorized by Turbotax

[KurtSSS]

I received a 1099-MISC for being an executor. TT automatically completed a Schedule C for it.

But the IRS is clear, it should not be a Schedule C, but a Schedule 1. 

From publ 559: If you aren't in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on your Schedule 1 (Form 1040), line 8z. If you are in the trade or business of being an executor, report fees received from the estate as self-employment income on Schedule C (Form 1040), Profit or Loss From Business.

It was a $1000 more to be on Sch C, btw. There was no way to move the income from Sch C to Sch 1 except via override. Which means that I can't e-file then. Looks like a programming issue to me....

I did call CS - no help.

[tagteam · Accepted solution]

You need to delete what you entered and change how you entered the fee.

Use the Less Common Income section and look for the miscellaneous income subsection at the bottom.

[DoninGA]

Use this procedure to enter the Form 1099-MISC.  It will be entered on Schedule 1 Line 8z and the amount flows to Form 1040 Line 8 as ordinary income.

To enter a Form 1099-MISC -

Click on Federal Taxes
Click on Wages and Income
Click on I'll choose what I work on (if shown)
Scroll down to 1099-MISC and Other Common Income
On Income from Form 1099-MISC, click the start or update button

Or enter 1099-misc in the Search box located in the upper right of the program screen. Click on Jump to 1099-misc

In the interview for the Form 1099-MISC make sure you select that this was not an intent to earn money and did not involve work like your main job.  On the screen for Uncommon Situations select None of these apply.

[KurtSSS]

I've been over the 1099-MISC multiple times.  I don't see a not an intent to earn money query.

1st screen ask who was the payer, payer ID #, and box 1-3. I only have box 3.

2nd screen - describe reason

3rd screen - uncommon situations - none apply.

4th screen - no, not like my main job.

5th screen - how often - 2021 and 2022.

6th screen - can deduct things.....

[DoninGA]

@KurtSSS Ok...let me check a few things and I will be right back

[DoninGA · Accepted solution]

@KurtSSS I just checked both the TurboTax desktop CD/Download edition and the TurboTax online editions to see if there were any differences between the two for the Form 1099-MISC interview.  Both are exactly the same.

After the 5th screen - How often 2021 and 2022

This is the problem - by choosing both 2021 and 2022 you are considered to be self-employed by the TurboTax program since you received this income in two tax years.  Go back and remove tax year 2021 and only select 2022.  Then the program will ask about the intent to earn money and will finish up with the income entered on your Schedule 1 and the Form 1040.

[KurtSSS]

I was wondering about the year thing. I will try that.

Thanks for the help!

[tagteam]

[cpruitt235]

After 6th screen you should get another one that says: Did the  "   "

involve the intent to earn money? 

I don't know if this will work but sometimes I go the backwards way to do it.  Go to Schedule 1 of Forms. Line 8z would be where this income would be reported if not for the purpose to earn money. You might try to enter there or have it link you to the worksheets

[tagteam]

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@cpruitt235 wrote:

After 6th screen you should get another one that says: Did the  "   "

involve the intent to earn money? 

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I did not get that screen, just a miscellaneous income summary.

[KurtSSS]

That was the problem. TT considered it a business because of the 2 years of payments.  I removed the 2021 box and everything populated correctly. Poorly designed query and bad assumptions on TT's part.

The Less Common Income route would work, but it requires ignoring the 1099-MISC. I searched 'executor' and TT didn't show me that section.

Thank you both for your help!

[tagteam]

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@KurtSSS wrote:

The Less Common Income route would work, but it requires ignoring the 1099-MISC. I searched 'executor' and TT didn't show me that section.

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For clarification, you can ignore the 1099-MISC because it does not get transmitted with your return when you e-file. Even if you paper file and attach the 1099-MISC, there is no place on the 1040 (or schedules) where that tax reporting statement appears as such. In sum, it is nothing more than a template in TurboTax for ease of entry for users.

Also, you type in "Executor's fee" so that it is perfectly clear as to from where the fee was derived.

[KurtSSS]

Thanks for the clarification. I was thinking of 1099-MISC like W2 or 1099-DIV, which populate certain areas - it's much more general.