Turbotax wants to treat income from 1099-misc as business income (schedule C) but I don't think this is right

[aac351]

I received a 1099-misc from PredictIt, which is a website where you can put money on whether certain political events will happen or not. The only box that was filled in was box 3 for other income, but when I entered it into TurboTax, it opened up an entry under the "Business Income and Expenses (Sch C)" section. It doesn't feel like getting some winnings from what is essentially politics gambling should count as a business, so I was wondering if there was another way I should characterize this income. For instance, when I am prompted for uncommon situations, should I select  prize winnings (I currently have none selected)?

[ColeenD3]

If this is something that you will continue to do instead of a one-time thing, it will either have to be considered a hobby or Self-Employment income. For now, you can add it as Other Income.

• I'll choose what I work on
• Less Common Income select Start (or Update) for 
• Miscellaneous Income.
• Other reportable income and you can enter your own description(s) and amount(s).

[aac351]

Hi @ColeenD3,

Thanks for your reply. So if this is a one-time thing, I should delete the 1099-misc section in TurboTax and enter it as Miscellaneous Income instead?

[ColeenD3]

Yes.

[aac351]

@ColeenD3  I tried doing what you suggested but on the screen for reporting Miscellaneous Income, it specifically says not to include income from1099-misc forms. Should I ignore this? 

[Bob_E]

Follow the instructions as above, but choose the heading under "Other Common Income" rather than "Less Common Income."

[DianeW777]

Yes, you can ignore that statement. There is no reason to actually enter the Form 1099-MISC into the software as long as the income is present and it will populate on the appropriate line of Form 1040, from Schedule 1.

The other issue you may be having when you enter it as a 1099-MISC is that this  income did not involve work or an intent to 'earn' money.  When those questions are answered incorrectly, then it takes you down the wrong interview path. Following the instructions provided will provide the correct results without having to answer questions that do not apply.

[aac351]

@DianeW777 I answered yes to the question about intending to earn money because that's why I (and I assume most people) went on PredictIt in the first place. But I see your point that it didn't really involve work, and indeed, in the example for intending to earn money, it mentions signing up for a job.

Does that mean the correct answer is there was no intent to earn money? In any case, I tried doing it both this way and putting it under other reportable income and I got the same amount for taxes owed.

[DianeW777 · Accepted solution]

You are correct.  This money is not from a job with the intent to earn money at a job.

The question is there because some employers report certain monies on Form 1099-MISC when it should be included with the W-2 income.  This makes the question very important for those situations.

[aac351]

Thanks for your help, that makes sense about why the question is asked.