If someone else paid my tax liability how do I recognize that income? if in fact it is income.

[Hal_Al · Accepted solution]

You are correct, any money you are paid or were paid on your behalf is reportable income. The proper way would have been for the payer to include it on your 1099-Misc.  If not, you'll be given a chance to enter it separately in TT.  After entering your 1099-Misc, you'll be asked if you received other money.

Yes, it is 2018 income, not 2017, since that's when your received it. Even though the check was made out to the IRS, you had constructive receipt, when it was submitted with your tax return.

[zduchene]

So enter it in 1099-Misc "other income". Got it.  Thank you!

[macuser_22]

Gifts are not reportable income.

[zduchene]

Unfortunately it is not a gift. It would be more like the company paying my taxes.

[macuser_22]

How did they pay your tax?
Are you a W-2 employee?
Did they add a bonus to your pay?

[zduchene]

1099 employee. They wrote the check directly to the treasury.

[Hal_Al]

That's unheard of. What form did they submit; 1040-ES, 1040-V, box 4 of your 1099-Misc or something else?
The simple answer to your question is that any money you are paid or were paid on your behalf is reportable income. The proper way would have been for the payer to include it on your 1099-Misc.  If not, you'll be given a chance to enter it separately in TT.  After entering your 1099-Misc, you'll be asked if you received other money.

[macuser_22]

Ad when was it paid?  If paid in 2019 for 2018 tax, then it is 2019 income reported next year on year 2019 tax return.

However, this whole thing sounds fishy.    How would they even know what your tax is until you do your tax return?
Did they pay all of your tax, or maybe just a part of the SE tax  (employers share)  as if you were a W-2 employee.?

Sounds like there might be more to this than meets the eye.

[zduchene]

They paid all of it. So I completed the return in 2018 for 2017 taxes, found out what the liability is and they cut a check. I sent that in.  So I guess I would have to somehow recognize that "income" in 2018, since that is when the transaction took place.

There is a little more to it than meets the eye...

[Hal_Al]

Well, that does simplify it. If wasn't included in the 1099-Misc they sent you for 2018, you add it as other income.