I received a 1099-misc but not self employed

If you receive a form 1099-MISC for participating in a research study, then you are not considered as self-employed and do not need to file a Schedule C.

In TurboTax, enter your form 1099-MISC and follow the interview until you arrive at the page titled Did this involve an intent to earn money?. Answer that this did not involve an intent to earn money. The amount will be reported as Miscellaneous income and will not be subject to Self-employment tax.

In TurboTax, there is a work-around. Although you may receive this income every year, say that you only receive the 1099-MISC only in 2021, not in previous years and not in 2022, you will then have the screen where you can say that it did not involve an intent to earn money.

Which box of the 1099-MISC is the income in? Is it in box 3? If so, you must have answered a question wrong somewhere along the line. Income from 1099-MISC box 3 does not normally treated as business income or self-employment.

Here's how to enter a 1099-MISC with income in box 3 in TurboTax so that it is reported as "other income" instead of as business income. It will be reported on Schedule 1 line 8z with the description "Other Income from box 3 of 1099-Misc."

• In the Search box type "1099-misc" (without the quotes), then click the link that says "Jump to 1099-misc."
• The first screen asks "Did you get a 1099-MISC?" Click Yes.
• On the next screen enter the information from the 1099-MISC form, then click Continue.

TurboTax will now ask a series of questions about the 1099-MISC income. Answer as follows, even if some of the answers aren't true.

• "Describe the reason for this 1099-MISC." - It doesn't matter what you enter. Enter a short description such as "Research study." Click Continue. You will see this description used in some of the subsequent questions, but it will not appear on your tax return.
• "Does one of these uncommon situations apply?" - Select the last choice, "None of these apply," and click Continue.
• "Did the Research study involve work that's like your main job?" - Select No and click Continue.
• "How often did you get income for Research study?" - "I got it in 2021" will already be checked. Don't check any of the other boxes. Just click Continue.
• "Did the Research study involve an intent to earn money?" - Select No and click Continue.

Thanks!

I should have been more specific. 

The 1099-MISC form has only 

I was receiving treatment and agreed to participate in the research. 

Thank you!

I did not see this question "Did this involve an intent to earn money?". 

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@cvreal wrote:

The 1099-MISC form has only 

Box 6: Medical and Health care payments filled out.

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The 1099-MISC form is not filled out correctly. Box 6 is for payments to a physician or other health care provider. Payment for participating in a research study is supposed to be reported in box 3. The IRS instructions for filling out Form 1099-MISC say the following, on page 5.

"Other items required to be reported in box 3 include the following. . . .
3. A payment or series of payments made to individuals for participating in a medical research study or studies."

You should ask whoever sent you the 1099-MISC to issue a corrected 1099-MISC with the income in box 3 and zero in box 6, and to file the corrected form with the IRS. You can point out to them what the 1099-MISC instructions say.

If they refuse to correct it, don't enter the 1099-MISC in your tax return. Instead, you can follow the steps below to report the income as "other income" with the description "Medical research study." Hopefully that will head off any IRS inquiry about it. But you might get an IRS notice anyway saying that you did not report the 1099-MISC income. If so, you will have to reply to the IRS notice explaining what the payment was for, that the 1099-MISC was incorrect, and where you reported the income on your tax return.

Here's how to enter "other income" in TurboTax so that it will be reported on Schedule 1 line 8z with a description that you enter.

• In the Search box in TurboTax type "lawsuit settlement" (without the quotes), then click the link that says "Jump to lawsuit settlement." I know that's not what the payment is for, but it's the only search term I could find that gets you to the right place.
• The first screen asks, "Any Other Taxable Income?" Click Yes.
• On the next screen, "Other Taxable Income," enter the description "Medical research study" and enter the amount. Click Continue.
• On the next screen click Done.
• You will get a couple more screens with unrelated questions. If they don't apply to you, just answer No and click Continue.

@cvreal  I have revised and corrected my most recent reply about your 1099-MISC. Please return to the TurboTax support community online to read the revised reply. Do not rely on the copy that was sent to you in an email.

@cvreal  I see that you posted another question in which you said that the payment on the 1099-MISC was a "research stipend." That sounds like you were the researcher performing the study, not someone participating in the study as a subject. If you were the researcher performing the study, follow the instructions that I gave you in answer to the other question. If you were paid for participating in the research as a subject, follow the instructions above.

Note that in either case the 1099-MISC is wrong. If you were a researcher performing the study, then the payment should have been reported on a W-2, not a 1099-MISC. If you were a study participant, the payment should have been reported in box 3 of the 1099-MISC, not box 6.

The section was especially problematic.  I, like others here, did nor operate a business, but the program seemed to default to classifying the 1099-Misc income from box 3 as business income.  It auto-inked a Schedule C, which had numerous entries missing, thereby the program continued to fail the Review.  Information such as the address of the business, or business expenses, did not exist and bacame a loop of frustration. 

I finally went to the forms section, and forced deleted the Schedule C and all relatd worksheets.  This didn't work either, since it again failed the Review. Another Schedule C had been created.  It was only through trial and error that I discover that the question re prior and future years' payments of the same type, seemed to trigger an auto-default to a Business Income decision tree. 

This is a failure of this tax progranm.  There should have been a question up front whether the 1099-Misc is from a busineess or not.  Terrible progtramming logic and algorithm flow.  The Form 1116, foreign taxes paid was another quagmire of decison loops from hell.

TurboTax will not consider a 1099-MISC as self-employment income if you say the income was from an activity that didn't involve trying to earn money @FishBreeder.

Here's how to keep 1099-MISC Box 3 from becoming self-employment income:

1. Select None of these apply on Does one of these uncommon situations apply?
2. Select No, it didn't involve work like my main job on Did the Stuff involve work that's like your main job?
3. Answer How often did you get income...
4. Select No on Did the Stuff involve an intent to earn money?

Fish herder,

I so much agree with you!  I have been going  crazy for the last three years or more over this very issue. 1099-M not being handled correctly and multiple foreign taxes being nearly impossible to enter without massive work around. I’ve used TurboTax for decades but this may be the last year.  Both issues very programmable but just being overlooked.

My son received money from the state of Tennessee IEA program (educational money) on a 1099-MISC with an amount listed in Box 3 and no other boxes checked or with numbers. This is not wages, but it is also not one of the "uncommon situations" and thus must click "none of these apply." "It didn't involve work like [his] main job." He has only gotten it in 2021 but expects he will get it in 2022. "It didn't involve an intent to earn money." He has no other 1099s. Yet Turbo-Tax still creates a Schedule C and flags it because there is no business code entered. Yet, this is NOT a business. Why is a Schedule C being generated?

@AnDkamp  Don't say that he expects to get it in 2022. On the screen that asks how often he got income, just leave 2021 checked. Don't check any of the other boxes. That, together with the other answers that you listed, should make TurboTax report it as "other income" on Schedule 1 line 8z with the description "Other Income from box 3 of 1099-Misc."

I have the same problem with the 1099-MISC and the Schedule C being generated.  I get a very small amount in royalties every year for books I published 20 yrs ago.  Last year it did not trigger the Schedule C, this year it did.   I have a sneaking suspicion that they're doing this to force people to pay more for filing.  I'm using TT Deluxe, and I know that some additional schedules (including C) make you pay more when it comes to filing.  Not sure I will use TT again.

Royalties are supposed to be reported on Schedule E. 

This is how to enter that in TurboTax:

1. Select Federal from the left side menu.
2. Select Wages and Income toward the top left.
3. Scroll down/ expand the list and look for Rentals and Royalties.
4. Expand that section and find Rental Properties and Royalties (Sch E).
5. Click Start on the right.
6. Answer the first question Yes.
7. Select Royalties on the right, click Continue.
8. Enter the name and address from your 1099-MISC.
9. Select Other intangible as your type and click Continue.
10. Answer the next few questions.
11. When you get the screen that says, Let's enter the income from your 1099-MISC, enter your gross royalty in box 2.
12. If you have associated expenses, you can enter them in the screen that follow. 

What if it's a box 2 "royalty" but you are not self-employed? Tiny  payment for a book contribution over 20 years ago.

Be sure when you enter the royalty, you select 'Other' as the category.  When you complete your entry it will populate on Schedule E and not Schedule C.

Go back to your entry and delete it, then select Rental Properties and Royalties (Sch E) then choose 'Other' as the category and complete your 1099-MISC entry for your royalty income.

I had a similar problem in trying to do a deceased relative's taxes. She received a disbursement from her deceased husband's retirement account. She'd received it for multiple years. When I indicated that a Schedule C AND a self-employment tax were generated. Your work around of only reporting the income for 2021 worked that issue. Wish I'd seen that several hours ago.   🙂

@Dick_Gram 

A distribution from a "retirement account" should have been reported on a Form 1099-R, not a 1099-MISC. Entering a 1099-R in TurboTax would not have produced Schedule C and self-employment tax. Did you enter a 1099-R as a 1099-MISC?

What type of retirement account was it: a pension, annuity, traditional IRA, Roth IRA, 401(k), etc.?

I see I'm not the only one having issues in TurboTax reporting royalty money (from my husband's deceased father).

The 1099-MISC is for under $200 and TT wants me to complete a Schedule E for an additional $150?

Are small amounts of royalty income not reportable?

No, you must report all income from all sources if you are filing a tax return. So you will need to include the 1099-Misc on your return. 

 If you otherwise would not need to file and the $200 of interest was your only income, then you would not need to report it.

I'm having the same problem. And it never asks me if there was an intent to make money. Last year I had to manually remove some forms from turbo tax but don't remember what I did

Assuming you have a 1099-MISC with an amount in Box 3 that is not self-employment, delete the entry you started and then reenter the form as follows to get it to show up as Other Income (Line 8 of Form 1040) not subject to self-employment taxes:

1. Go to Other Common Income - in the Personal or Wages and Income section (see image below) - don't enter in Business or Self-Employment section
2. Income From 1099-MISC
3. Answer YES or Add Another 1099-MISC if you have others entered (you can delete the one linked to a business here too)
4. Enter the Payer name, Fed ID #, and Box 3 amount
5. Describe the reason > imputed income, research study, other taxable income, etc.
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

If your situation is different, please advise @Kyitos    Also note, if you already started a Schedule C, the Schedule C and the previously entered 1099-MISC will need to be deleted to remove the error.   

How to Delete Schedule C

Thanks very much for this answer. You solved my problem. TurboTax needs to make this clearer. In my case, the money was a grant from our local utility because we live in a wildfire zone and the payment is to clear the underbrush back from the house. 

This is indeed a failure of the logic behind this section in Turbotax. I received a 1099-MISC for an investment that pays a quarterly coupon rate per contract. It is not a dividend, not interest, etc.. The investment firm reports it correctly on the 1099-MISC. The intent of the investment is INDEED to earn income. So when I truthfully answer that question "Did this involve an intent to earn money" by ticking the box, there should be additional questions as to what the money came from. Instead the silly program assumes (incorrectly) it's from self employment business.