How do I handle income reported under 1099-MISC on a 1099-Composite

[poncho_mike]

In early 2021, I bought the ETN (exchange traded note) SLVO.  This ETN pays monthly dividends based on the proceeds from selling covered calls on silver.   For the months of January thru September 2022, the dividends paid out were reported as "Other Income" in the 1099-MISC Other Income category on the 1099 Composite.

For the months of October thru December 2022, the income was reported as interest and reported in the 1099-INT section of my 1099-Composite.

I don't understand why the earnings from this ETN were reported in two different categories.  I contacted the people at Ameritrade who generated the 1099-Composite and spoke to their tax department.  They told me they only reported the information that was provided to them by the ETN sponsor, which is Credit Suisse.  I put into a call to Credit Suisse, and have not received a response.

When I put this into Turbotax, it seems Turbotax seems to think this is income from some other type of endeavor and asks a lot of questions that don't really apply to what amounts to either a dividend or interest. 

Has anyone ran across this before?  

[poncho_mike]

I found that part of my problem was that I was relying on Turbotax to import all of the information.  After reviewing the 1099-MISC information, it asked me questions about the source of the income.  I input the information as dividends paid on SLVO ETN.

Now when I am into the business items, it is asking me about my Bussiness Income and Expenses.  Turbotax is asking me questions related to this being a business.  It is dividend income.  

What do I do here?  

[DawnC]

When you entered the 1099-MISC info, you answered something that indicated the income was self-employment income, so it is asking for your business details.  To enter the 1099-MISC as Other Income without any self-employment tax - You need to delete the Schedule C completely (use the instructions in that link) and delete the 1099-MISC entry that created it (don't try to edit it, it won't work).   

After you get rid of the 1099 and the Schedule C, re-enter the 1099-MISC, but make sure you answer the follow-up questions as instructed below.   If you enter it as follows, the income in box 3 will go to Schedule 1, Line 8 and it will be included in ordinary income on your tax return and will not require the business info.  But you have to delete the entire Schedule C and 1099 form you started first.

1. Go to Other Common Income
2. Income From 1099-MISC
3. Answer YES
4. Enter the Payer name, Fed ID #, and Box 3 amount
5. Description > other income from composite 1099 or similar
6. None of these apply
7. No - doesn't involve my main job
8. I got it in 2022 - - Mark only this box - you should only have 1 checkmark on this screen
9. No - doesn't involve the intent to earn money 
10. Done - no schedule C required

[poncho_mike]

@DawnC, Thanks for the reply.

When I click on the link inserted into the original text, it give me a message below.  I made sure I was logged into the Turbotax community, so I took a look at the URL.   I put the bulk of the search text into the search bar, and I found  an article that looked like the one you were talking about.  I clicked on the first link, got the no page found screen again.  The second entry worked.

There was nothing to transfer over from my 2021 return since I didn't buy it until early 2022.  Please verify the page link.

Thanks.

PS:  For some reason, adding images isn't working.

[poncho_mike]

I guess only one image per post.

[JulieS]

Here are the instructions to delete your Schedule C in TurboTax:

1. Open your return, select Wages & Income and scroll down to Tax Tools on the bottom of the left side menu.
2. Select Tools.
3. Click on Delete a form (third on the list at the bottom of the screen).
4. Find Schedule C on the list of forms, click Delete to the right.
5. Confirm your Delete.
6. Click Continue in the lower right. 
7. Check for other instances of Schedule C and Form 1099-MISC, repeat the process until you don't see either form on your list. 
8. Click Continue with my return.
9. At this point you can follow DawnC's instructions to enter the 1099-MISC. 
    

[Critter-3]

Easiest method ...

Enter this Miscellaneous Income:

1. Click on the Federal tab.
2. Click on Income & expenses.
3. Scroll down to Less Common Income.
4. Click on Start or Update button Miscellaneous Income, 1099-A, 1099-C
5. On the next screen (Let's Work on Any Miscellaneous Income), click the Start or Update button for Other reportable income.
6. Did you receive any other taxable income.  Click Yes.
7. Other Taxable Income, enter a description and the amount.  Click Continue.
8. Click Done.

The income will be reported on Schedule 1 line 8 (z) with the description that you entered.

[poncho_mike]

I think I have it.

-  I went to Forms (top right) and deleted the Schedule C

-  I went back to Turbotax and deketed the 1099-MISC from the 1099-MISC and Other Common Income

-  I went down to the Business Items, Business Income and Expenses (Sched C) and deleted the 1099-MISC.

-  I then created a new 1099-MISC entry in the 1099-MISC and Other Common Income section.

-  I populated everything as instructed.  By not checking that I intend to have the income in 2023, it asked me a different set of questions.

If any of this sounds incorrect, let me know.

Thanks.

[jtbusfield]

Deleting the schedule C may create more problems since I am a self employed consultant and need that schedule. I can recreate it I guess, but is there an alternative?

Joe B.

[AmyC]

You hopefully don't need to delete sch C for your actual business. If it went on your business, remove the 1099 to get it off of your business income. See if there are any underlying forms you can delete.

Hopefully you can back it out without affecting your sch C. The worst case scenario would be deleting it.

@jtbusfield