How do I report 1099-MISC investment income that is not from employment but is from quarterly interest payments on structured notes held in a joint brokerage account?

[Hal_Al]

@larrylhalljr 

What kind of investment income was it?  What did you do to get this money.  And, why was it reported to you on a 1099-Misc? What box # on the 1099-Misc is the $ shown in?  And why are you going to get it every year?

Normal investment income (interest , dividends, capital gains/losses are not reported on a 1099-Misc.  If  the income is similar to interest and dividends, then reporting it as "other income", as described by others  is OK.  But, if this the sale of an asset or the return of capital, it needs to be handled differently. 

[larrylhalljr]

It's Investment income, don't understand why BlockFi LLC gave me that form vs the usual investment 1099? This investment income doesn't have anything to with any business.

[larrylhalljr]

Well, that didn't work, Turbo Tax has a major bug because now it won't e-file because it wants all kind of business information, which I don't have since I wasn't a business. The Interest Investment is for me, no business however TT still thinks this is for a business. That's a bug. I'm dead in the water. Like I said, I could have manually filled out the paperwork and have my refunds. TT should refund my money. Probably last year for using this product.

[Hal_Al]

Delete the 1099-Misc. Re-enter and Follow Irene2805's instructions for entering the income . It goes on line 8 of Schedule 1, as "other Income" on a Form 1099-Misc. 

Enter the 1099-Misc

On the next screen Describe what the payment was for

On the next screen select "none of these apply"

On the next screen select "No it didn't involve work like my main job"

On the next screen select "I got it in 2020" ONLY

On the next screen select No, it didn't involve intent to earn money

From BlockFi Website:

If you’re a US taxpayer with reportable income, BlockFi may provide you with two separate reports related to your BlockFi Interest Account (BIA) and any trading activity you performed throughout the year.

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. Please note, only US taxpayers who have earned more than $600 of interest and bonuses in 2020 will have a 1099-MISC form, which will be available for download by January 31, 2021.

Additionally, US taxpayers who have traded during 2020 will receive a 1099-B form used to report activity. This report will be made available for download by February 15, 2021.

[GeneToo]

Actually, TurboTax can handle this but it depends on how you enter the information.

Follow the process as follows:

1.  Delete the 1099-MISC entry that created the Schedule C

2.  Go to forms and delete the Schedule C and the Schedule SE if one was created.

3.  Reenter the 1099-MISC as before except answer the follow-up questions as follows:

     (1) Check 'Got it in 2020' only, do not check previous years even if you did receive it previously.

     (2) Check the box that states that you do not intend to get the income next year. These answers trick TurboTax so that Schedules C & SE are not created.  

     (3) Go to forms to ensure that a Schedules C & SE were not created.

This solution was posted by others several weeks ago and it worked for me!

[roadhog444]

The problem is the income does not show as other income... with those answers (especially no intent to make money) the income defaults to zero. It was income based on investments and taxes are owed, but the logic in TurboTax is making it look like zero income with no taxes owed.

[KREC]

I know this thread is from last year but I too got a 1099 MIsc as part of a composite broker statement. This is the first year I’ve had this new structured investment account. When I imported the overall statement TT did not import the 1099 MISC portion. Do so manually enter it? How do I attach the 1099 MISC to my return if I’m filing electronically?

[JillS56]

Yes, you will need to enter the 1099-MISC manually under Income and Expenses.   You will not need to attach the 1099-MISC with your tax return.  

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

1. Open or continue your return
2. Select Search and search for 1099-misc
3. Select the Jump to link in the search results
4. 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
5. Enter the info from your form into the corresponding boxes
   • If you need to enter boxes 4–6 or 8–17, check My form has other info in boxes 1–17 to expand the form

Boxes 1 and 2 missing from your 1099-MISC screen? Go back to the main 1099-MISC screen using the steps above.

How to Enter 1099-MISC

[Hal_Al]

Generally, no 1099s are sent with your tax return, whether they are entered manually or imported. When TurboTax does need to send something, they are handled the same whether entered manually or imported.

[Walt-PDX]

Hello,

For the 2021 tax year I received a 1099-MISC on a consolidated 1099 statement from TD Ameritrade.  That 1099-MISC consisted of entries on lines 2 and 3.  

If the 1099-MISC only contained line 3, the procedure above (described by Irene3 and others) works fine to put that amount on Schedule 1 and not create the Schedule C or SE.

The issue is that the Royalty income in line 2 asks its own set of questions. In particular it wants me to classify that income as either "Investment income from property you own" or "Royalty income from your business, including artist royalties or operating natural resource business (schedule C)" but neither applies.  If I pick "Investment income from property you own" a new Schedule E Worksheet is created and the other option will create a Schedule C.  Neither seems is appropriate as the Royalty income is from an investment in a publicly traded Trust.   

The new Schedule E Worksheet may not be a big issue if it is not filed as part of the return. But if it is, there is data there that is a bit strange.  I was forced to populate the "Property description" field on the worksheet.  Oddly TT added the description of the income required in the step-by-step interview "Investment Income" to the "Location (street address)" field in that worksheet.  That worksheet also required me to answer the question "Did you make any payments that would require you to file Form(s) 1099?".  All of this seems crazy as this royalty income is from an investment not a property that I directly own.

So, the question is, how to correctly enter this in TurboTax?

Thanks for input on this!

[KREC]

Why would TT import the other portions of the composite 1099 broker statement but not the 1099 MISC portion? 

[Hal_Al]

The 1099-Misc is not standard for a composite broker report.  You'll have to enter it by hand.  Depending on the  source of this 1099-Misc income, it may not get entered in the 1099-Misc section. 

[sjmuck]

I've followed these instructions multiple times, and it always still results in the structured note investment income being reported on Schedule C.  If I change the reason for the income from 'None of these' to another option like 'Lawsuit settlement', it then does not report it on Schedule C, but as other income.  Help would be appreciated

[AbrahamT]

Just to clarify, where would you like this income to be reported? It sounds like you want this to show up as investment income, not on a Sch C and not as Misc. Other Income. Would you rather this be classified as Investment Income instead? 

If that's the case, here's what I would do

Hit the magnifying glass in the right

Type in 1099MISC

then next Box 3-Other Income

then next screen, Describe the reason for this 1099MISC, say investment income

then continue till the screen Did this investment income involve work like your main job

continue, continue till Did this investment income involve an intent to earn money, say no

this income will seamlessly flow to Sch 1, Line 8z which will consequently flow to the 1040 line 8. As long as it's picked up as income and you are taxed on it, it does not matter which particular line it shows up on.

[sjmuck]

Last year, same situation, Turbotax reported it on Schedule 1, line 8z, which is where I think it should be reported.  This year, following all help instructions I've seen, doing it the same way, it pops out on Schedule C. Only way I can seem to drive it to Schedule 1 is by noting a specific reason for the income (uncommon situations) like a  legal judgement.  No option exists on the uncommon situations for something like this investment income...