If I get passive income (not work related) from Morgan Stanley Structured notes and I enter IN 1099 misc I get a very higher tax than 1099 INT. ai SAID TO ENTER IN INT

[GAUTAMS1113]

AI SEARCH IN TURBO TAX ASKED ME TO ENTER IN 1099 INT. Also if I enter in 1099 MISC it appears as bUSINESS INCOME WHICH ITS NOT

[DianeW777]

It depends. You can change your answers in the 1099-MISC entry and the income category in your case will not change the tax results. 

It's important that you made the appropriate selections so that TurboTax does know that it was not self employment income.

1. Open your TurboTax Online/Mobile or TurboTax Desktop tax return
2. Search (upper right) > type 1099misc > click the Jump to... link
3. Begin your entry of the 1099-MISC.
4. It's important for you to select 'None of these apply" and then you should also select the following:
   1. 'No' on the screen 'Did the '____' involve work that's like your main job?'
   2. 'No' on the screen 'Did the '____'  involve an intent to earn money?'

This will report the income without any business/self employment activity and it will show up on Form 1040, Line 8 (From Schedule 1, Line 8z).

• Continue to complete this section.

[baldietax]

there is a key question during 1099-MISC entry which asks if the income as "intent to earn income", say NO to that as it is passive income and it should remove the Schedule C and will be taxed as ordinary income

[GAUTAMS1113]

Hi thank you for the feedback- I followed this and it still summarized it as business income and taxed me much higher than reporting as 1099 INT- Is there any issue reporting as 1099 INT.  The tax should be the same regardless right?

[DavidD66]

It should be reported as "other income".  Try deleting your 1099-MISC entry and start over.  Follow @DianeW777's instructions above and it will be reported as other income, not self-employment income.  Be sure to:

• Indicate "None of  these apply" on the "Do one of these uncommon situations apply?" 
• Indicate "No, it didn't involve work like [your] main job 
• Mark "[You] got it in 2025" only  
• Mark "No, it didn't involve an intent to earn money"