Problem entering Celsius Network LLC 1099-MISC, registering as a business

[Kon21]

Hello, I'm trying to add the 1099-misc I got from Celsius.

when I do that, it creates a Schedule C "Profit or Loss from Business". It's not a business, so how do I properly enter it?

This was not a problem with TurboTax for 2020.

[VolvoGirl]

Why did you get a 1099Misc?  It's not for self employment?

[Kon21]

No idea why it's 1099-misc, but that's how they have always sent it. It wasn't a problem in TurboTax 2020. As far as I know all the crypto companies that offer interest send out 1099-misc.

[PatriciaV · Accepted solution]

Since it sounds like the income from your 1099-MISC was for interest earnings and not mining, you want to make sure it is entered correctly on your tax return. 

1. With your return open, go to Federal > Wages & Income
2. Open the Less Common Income section and start or revisit the last entry, Miscellaneous Income, 1099-A, 1099-C.
3. On the next screen, start/revisit the very last entry, Other Reportable Income, and answer Yes on the following screen.
4. On the next screen, enter a description (for example, "Crypto Interest") and then enter the total USD amount.
5. You may repeat this for every currency for which you received interest or combine them on a single line.
6. Select Continue when finished.

[Kon21]

TY PatriciaV! Super helpful. So you are saying it's OK to sum up all my interest into a single line? IRS won't find that to be TOO confusing?

[PatriciaV]

In general, as long as you report all your income, and have evidence for the numbers on your tax return, you are fine. The IRS computers check to be sure the totals they have from 1099's match the totals on your return.

[mattmouth182]

Turbo Tax very clearly states on this page (Other Taxable Income, accessed following your directions):
"Do not enter income reported on Form 1099-MISC"

Who should i trust you or TT?

[ColeenD3]

You can enter your 1099-MISC following these steps. Be sure to indicate that it is for interest income, not related to your job, and not an intent to make money.

To enter a 1099-MISC for miscellaneous income in TurboTax:

1. Open or continue your return
2. Search for 1099-misc and select the Jump-to link

1. Answer Yes to Did you get a 1099-MISC?
   • If you already entered a 1099-MISC, you'll be on the 1099-MISC Summary screen, in which case you'll select Add Another 1099-MISC
   • If you need to edit or delete a previously entered 1099-MISC, select the appropriate button
   •  
   • @mattmouth182

[mattmouth182]

@ColeenD3 

But I definitely did intend to make money, that is why I invested crypto in this account.

This feels like I am being untruthful.

[Vanessa A]

You intended to make investment income, not income from working or a business. If you say it was an intent to make money, TurboTax will send you to the business section to put this income on Schedule C. 

This question is not an IRS as much as it is a programming, where to take you next question and which form to report.

Normally investments would be reported on a 1099-Int or 1099 DIV or 1099B not a 1099 Misc. 

[mattmouth182]

I see, so it's just poor wording on TT's part? So the "intent to make money" question is only there to determine if the income counts as a "job"? What is the IRS's definition of what type of income should be on a Schedule C?

Would it be better to just input it as a 1099-int even though it is a -misc? 

[DaveF1006]

Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if:

• Your primary purpose for engaging in the activity is for income or profit.
• You are involved in the activity with continuity and regularity.

This is a loose definition on what the IRS requirements are for filing a Schedule C as these definitions apply to earned income rather than passive income earned from investment income. 

No, do not input this as a 1099 INT because this will not match the 1099 MISC that the IRS has on record.

@mattmouth182

[mattmouth182]

maybe this will help shed light on why it was sent out as a 1099-misc:

"According to the IRS, earning income on crypto is considered a taxable event in the US, and cryptocurrencies are generally treated as property (similar to gold or shares in publicly owned companies) for tax purposes. That means that interest paid to you on crypto assets are payments of property, making them subject to reporting through the 1099-Miscellaneous (also known as the 1099-MISC) form."

So it seems that the the reason it is a "misc" is that the payment is in a property, not a currency. Does this change your opinion?

If I bought an oil pumping well and let a company use it (on their land), and in return they paid me in oil, how would that be taxed?

[ColeenD3]

Yes, the intent to make money refers to doing this as a job, not an investment.

[ericgfx]

Hmmm. Im using the online version. There is no Jump To Link. When I use the Search (magnifying glass) I just get a bunch of articles saying search, then jump to link. A frustrating loop. Keeps putting it into Self-Employment work....