The trust entity that administers our sub plan provided instructions that specifically state that it should not be listed as "self employment." I'm no expert, and 2022 will be the first year I have dealt with this. This particular fund comes from wages I earned on CA prevailing wage jobs. It is not contributed by my employer, but deducted from my wages. As you stated, my employer did not pay those various taxes on the income. I hope others are more familiar with this than I am.
From their documentation:
"All disbursements you received from the **** SUB Plan will be reported on tax form 1099-MISC, sent by
**************** Bank. A 1099-MISC can be used to report a variety of different incomes, from jury
duty to Indian gaming profits. The most common use of a 1099-MISC is for self-employment. It is
important that you understand that this is NOT to be reported as self-employment income. If it is
reported as self-employment income, you will likely owe additional self-employment taxes.
Turbo Tax:
Turbo Tax almost always defaults income reported on a 1099-MISC as self-employment income. Below
are the directions to get Turbo Tax to classify this as “other income”.
Disclaimer: Some of these directions may feel like you are being less than truthful. That's because
the only way to get Turbo Tax to NOT recognize this as self-employment is to give answers that
manipulate their software into putting your income onto line 8 of a schedule 1. You are not lying to
the IRS; you are simply making Turbo Tax classify this correctly.
1. Under the “Federal Tab”, choose “Other Common Income”, and then form 1099-MISC.
2. When filling out the 1099-Misc info, make sure to click the box “My form has other info on
boxes 1-18” which will allow you to fill out box 4 (federal income tax withheld).
3. After you input the 1099-MISC, Turbo Tax prompts you with "Describe the reason for this
1099-MISC. Type in "Supplemental Unemployment Benefit Plan"
4. This opens another question: "Does one of these uncommon situations apply?"
Choose "None of these apply" and continue.
5. The next question is: "Did Supplemental Unemployment Benefit Plan involve your
main job?" Choose "No, it didn't involve your main job"
6. Turbo tax will now ask how often you get this money. Only check mark 2021. Do
NOT check any other year.
7. Lastly, Turbo Tax will ask, “Did this involve an intent to earn money?” Click No.
Any other choice in Turbo Tax will end with you incorrectly owing self-employment taxes.
If you want to double check if this was done correctly, take a look at your federal return. Turbo Tax will
allow you to do this by clicking “Tax Tools”, “Print, save or preview this year’s return”. Look at the
Schedule 1, which is titled at the top “Additional Income and Adjustments to Income”. If your SUB Plan
income is not located on line 8 of the Schedule 1, it’s been done incorrectly. If it’s on line 3 of your
Schedule 1, Turbo Tax has classified this as self employment."
Again, the above info was provided by the entity that administers my sub plan. I'm not giving advice. I'm just offering info to the community.
