457(b) deferred comp now on 1099-MISC; was on W-2. Confusion reigns.

[raml5]

My 457(b) for my pension (i.e., deferred compensation) used to be on a W-2, and now for 2019 taxes it is on a 1099-MISC. I entered it in the 1099-MISC section, but it again shows up under business items. TurboTax is peppering me with business related questions, none of which apply because this is not a business.

Any help with respect to where the magic is to treat this properly would be greatly appreciated. Thanks.

[JamesG1]

To report the 1099-Misc so that self-employment tax is not computed, follow these steps:

• Down the left side of the screen, click on Federal.
• Across the top of the screen, click on Income & expenses.
• At the screen Your tax breaks, scroll down to Income from 1099-Misc.  Click on Edit/Add to the right.
• At the screen 1099-Misc Summary, click on Edit to the right of the 1099-Misc to be edited.
• Enter the form information, click Continue.
• At the screen Describe the reason for this 1099-Misc, enter the reason.  Click Continue.
• At the screen Does one of these uncommon situations apply?, click on None of these apply.
• At the screen Does the xxx involve work, click on No, it didn’t involve work.
• At the screen Did the xxx involve an intent to earn money?, click on No, it didn’t.
• The income should be reported as Other Income on line 8 Part I of the 1040 Schedule 1 and not be subject to self-employment tax.

[robert3951]

457 B plans are not a qualified plan meaning they don' t have the same benefits as a standard deferred compensation plan.   For examples if the company you are working for is sold, dissolved, or etc you cannot transfer your deferred income to a IRA or another 401 K of a different business.   Typically deferred comp plans are only for a certain class of employee in a business and so not all employees are eligible which is one of the reason that are not qualified.   

Since I don't know what questions Turbo Tax is asking not sure what info is being requested but I would guess has something to do with your deferral plan still being valid.   Is sort of like your deferred income is actually in trust with your employer not the third party entity like a 401 K.   It as though you have some equity in your employer business.  So the deferral is not just a standard employee retirement benefit, which is reported on a W-2.

[DaveF1006]

This should have never been reported on a 1099 MISC. it should have been reported on a W2 in Box 12. According to this IRS link, 457(b) plans are:

• Contributions to a 457(b) plan are tax-deferred.
   
• Earnings on the retirement money are tax-deferred.

A 457(b) plan is a deferred compensation plan for employees of state and local governments or certain tax-exempt organizations. An eligible government 457 deferred compensation plan is not a qualified plan but this doesn't mean that contributions are taxed deferred.

For informational purposes, contributions to a 457(b) plan are indicated with a code "G" in Box 12 of the Form W-2.

[Dave84]

JamesG1... Thanks for the suggestions. Working through them didn't fix my issue , but it may have kept me from having the issue in the 1st place had I not already gone down the wrong path. And you've given me a lot of good leads. I'll post an answer once I figure it out.

[Dave84]

DaveF1006... Agreed. Getting a W-2 for this in the past made it very easy.  Changing to instead get a 1099-MISC has caused complication and doesn't seem right.

[Dave84]

robert3951... The company I worked for still exists. TransAmerica (not the company I worked for) administered the 457(b) through the end of 2018 at which time Prudential took it over. When TransAmerica administered the plan, they sent me a W-2. Now that Prudential administers the same plan, they sent me a 1099-MISC. Possibly a a result of answering "Did the 457(b) involve work that's like your main job?", I chose "Yes, it involved work like my main job or it was my main job" rather than "No, it didn't involve work like my main job". Changing that answer (thank you JamesG1) is I think the first clue toward solving my problem. Even doing that though, the 1099-MISC income is still listed on Schedule 1 line 3 as “Business Income" rather than on line 8  as “Other income” (again, thank you JamesG1).  So I have more to try, but a few leads.

[raml5]

It did not seem to matter what I answered to the "Does the xxx involve work" question when entering the 1099-MISC, TT still created a Schedule C for business income, but your suggestions were a great help. What worked, was the following:

- In the "Wages & Income" list
      ---- Entering the 1099-MISC info

      ---- Deleting the "Business Items / Business Income..." entry 

- In "Forms" on the 1099-MISC form, manually changing box 3 from Schedule C to Other Income. 

Thanks again for your help. (I seem to have 2 accounts. The raml5 and dave84 entries are all mine.)