How do I report 1099-MISC investment income that is not from employment but is from quarterly interest payments on structured notes held in a joint brokerage account?

[wmsrd04096]

this relates to investment income and is not from any employment or services provided

[Hal_Al]

What box # on the 1099-Misc is the $ shown in?
WHY is your broker reporting this income on a 1099-MIsc, instead of a 1099-INT?

[IreneS · Accepted solution]

UPDATED FOR TAX YEAR 2019

You can enter the 1099-MISC in TurboTax as "Other Common Income," which is reported on line 8 of 1040 Schedule 1 and will not generate Schedule C or SE tax.  Please use the following steps:

1. Click on Federal > Wages & Income.
2. Scroll down to the Other Common Income section. 
3. Click on the Start/Revisit box next Form 1099-MISC. 
4. On the screen Did you get a 1099-MISC?  click on the Yes button.
5. On the next screen, Let's get the info from your 1099-MISC, enter the information from the 1099-MISC.
   
   
6. On the following screens, answer the following questions:

• Did it involve work that's like your main job? No.
• You got it in 2019
• No, it didn't involve an intent to earn money

1. Continue through the rest of the interview screens. The income will appear as Other Income.

[Edited | 4/15/2020 | 9:07am PDT]

[Hal_Al]

The income shown in box 3 of a 1099-Misc should be reported on Schedule 1, line 21.

The IRS considers anything in box 7 of 1099-MISC to be self employment income. TurboTax (TT) aggressively steers you in that direction. If you try reporting box 7 income as anything else, you chances of hearing from the IRS are very high.

[jnrgarbutt]

Thank you.  Why is it that when I report this under   1099Misc  (under Box 3) it is also reported as a Business Income (Schedule C)? Does that mean I’m being taxed twice for the same money?

[Hal_Al]

@jnrgarbutt - Normally an amount in box 3 is not self employment.  But the TurboTax (TT) interview is designed to aggressively see it if it really is.  You answered the questions in a way that TT concluded it is self employment.

What did you do to get this money. Any sort of labor or service (work) is considered self employment.

Yes, you are taxed twice. You pay regular income tax and you pay self employment tax (social security and medicare tax about 14%)

[nadnoslo]

Is it the same for 2020? Also it only allows me to specify my wife or my self as the owner. The MISC-1099 came from a joint investment account

[Hal_Al]

Yes and No.

There's a big change for 2020. Self employment is now reported on a 1099-NEC (brand new form) rather than a 1099-MISC.  Note that there is no box 7 on the 2020 1099-Misc.

But, TurboTax stills steers you to self employment, because this first year, "employers"  are still mistakenly using the 1099-Misc. 

Follow IreneS's instructions above to get it to to the right place (line 8, Schedule 1 for 2020).  You cannot designated a 1099-Misc to both spouse's.  It has to got the person who's SS# is on the form. 

[GeneToo]

Tried the 2019 solution for TurboTax and the 2020 TurboTax app will not let me enter 1099-MISC income from my broker without generating a Schedule C and Schedule SE.

Is there an update to this solution for 2020 or should I just delete the Schedules after entering the 1099-MISC data?

[MaryM428]

On the TurboTax app

• Wages and Income
• Other Common Income
• Form 1099-MISC
• Fill in the screens and then the reason for the income
• Select None of these apply for the question Do One of These Common Situations Apply?
• Not like your main job
• Put correct answer for How Often
• No for Intent to earn money

Does 1099-MISC mean self employed:

@GeneToo

[GeneToo]

The 1099-MISC in question is from a broker, the income is from an investment, and the income is reported on Line 3 - Other Income.

The Subject line (above) was cut short.  The rest of the story is that the 1099-MISC income is from a structured note investment with a brokerage firm.

[JohnB5677]

You are not self-employed, so you should follow these steps.  If you do not follow this posting procedure it will result in self-employment.  You would then have to pay 15.3% in self-employment tax (Social Security & Medicare).

Wages & Income

• Scroll to Other Common Income
• Select Income from a 1099-MISC
• Post your information from the form [Continue]
• Describe the reason for this 1099-MISC
• Post Moving Incentive
• Does one of these uncommon situations apply?
• Select None of the above
• Did the moving incentive involve work that's like your main job?
• No
• How often did you get income for moving incentive?
• Check Got it in 2020
• Did the moving incentive involve an intent to earn money?
• Answer No

[Hal_Al]

• How often did you get income for moving incentive?
• Check Got it in 2020 only

Lying to TurboTax to get it to do what you want does not constitute lying to the IRS.

[larrylhalljr]

Same issue, receive 1099-Misc for investments. TT keeps thinking it's from business even though I've stated otherwise. Too bad there wasn't a question for investment or not business so I could skip all other questions. I tried to electronically file but TT won't allow because it wants to know about my business for the 1099-misc investment money. This is one of those where I could have been finished filling out the form manually vs using TT. I've spent around 4 hours, with 2.5 trying to figure out this issue(researching, deleting first 1099-misc because of thinking it was business income). Only thing I clicked differently is that I know I will get the same 1099-misc for investments next year. I will unclick that box and see if anything changes. The investment is in both my wife and my name but it doesn't give the option???

[Irene2805]

You can enter the 1099-MISC in TurboTax as "Other Common Income," which is reported on line 8 of 1040 Schedule 1 and will not generate Schedule C or SE tax.  Please use the following steps:

1. Click on Federal > Wages & Income.
2. Scroll down to the Other Common Income section. 
3. Click on the Start/Revisit box next Form 1099-MISC. 
4. On the screen Did you get a 1099-MISC?  click on the Yes button.
5. On the next screen, Let's get the info from your 1099-MISC, enter the information from the 1099-MISC.
    
6. On the following screens, answer the following questions:
   • Did it involve work that's like your main job? No.
   • You got it in 2020
   • No, it didn't involve an intent to earn money

 7.  Continue through the rest of the interview screens. The income will appear as Other Income.

@larrylhalljr