1099 MISC

[Photoman]

I retired from my job on 1/1/2021.  In July 2021 I received a check from my former employer. Then earlier this year I received a 1099 MISC. There was no Federal or State income taxes showing on the 1099. I called my employer asking what the check was for and why no taxes were deducted. They said that it was a California Compliance issue where they had to pay a penalty because my last paycheck was not deposited into my account within 72 hours of my termination of employment date.  I added the 1099 into Turbo Tax but it wants to treat this like a business, asking for a business name and it wants a principal business code. I'm not sure how to correctly try and process this 1099. I don't have a business or a business code.

[JohnB5677]

That is not really income it is a settlement.  You can enter it as follows and not be subject to self-employment.

1. Wages & Income
2. Scroll to Other Common Income
3. Select Income from a 1099-MISC
4. Post your information from the form [Continue]
5. Describe the reason for this 1099-MISC
6. Post XXXX
7. Does one of these uncommon situations apply?
8. Select None of the above
9. Did the XXXX involve work that's like your main job?
10. No
11. How often did you get income for XXXX?
12. Check Got it in 2021
13. Did the XXXX involve an intent to earn money?
14. Answer No

If you do not follow this posting procedure it will result in self-employment.  You would also have to pay 15.3% in self-employment tax (Social Security & Medicare).

[Photoman]

Then I take it that I shouldn't have to put anything in the Business Income and Expenses area?  If that's correct, then I think I should be good!

[DianeW777]

Yes, that is correct.  This is not business income and likewise is not subject to social security or medicare taxes. As our awesome Tax Expert @JohnB5677 stated, it is a legal settlement.

[kigerlaw]

1040 Line 8 other income.  Double click and follow the instructions.

Also use the 'other income statement" and link it to line 8.