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Patrick-id
Returning Member

Same income is reported on W-2 and 1099-MISC

In 2024, my child was born, and I took “bonding” time off provided by my employer. During this period, I was fully paid by my employer, and everything appeared correct on my W-2.

 

Later, I received a 1099-MISC from an insurance company I don’t recognize, with income reported in “Box 3: Other income.” When I called the insurance company, they said it was related to a “bonding” claim. However, I never received any payment directly from them—they told me to contact my employer.

 

When I asked my employer, their only response was that they “aren’t tax advisers.”

 

Now I’m unsure how to handle this:

  • If I report both the W-2 and 1099-MISC as-is, I’ll effectively double-report the same income and owe taxes I shouldn’t owe.
  • If I don’t report the 1099-MISC, I’m worried this could flag an audit since my tax return would deviate from what’s been reported under my SSN.

 

What’s the correct way to handle this situation to avoid double taxation or audit risks?

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3 Replies
DianeW777
Employee Tax Expert

Same income is reported on W-2 and 1099-MISC

It depends.  If you are correct, that the company included the payments in your wages and they are included in the W-2, then you would not be required to report the income twice.

 

Double check your pay stubs to be sure your W-2 wages actually reflect the amount you received for 'bonding' time. If you are convinced and have proof you can keep with your tax records you can enter the 1099-MISC as other income and then also as a negative income amount.

 

When you are signed into your TurboTax Account use the following steps to enter the income:

  1. Click Tax Home (left panel) > Select Income and Expenses > 
  2. Scroll down to the Other Common Income section. 
  3. Click on the Start/Revisit box next Form 1099-MISC. 
  4. On the screen Did you get a 1099-MISC?  click on the Yes button.
  5. On the next screen, Let's get the info from your 1099-MISC, enter the information from the 1099-MISC, box 3.

Once you have entered the income you can use the following steps to enter it as a negative figure which will result in zero income being added to your other income.

  1. Click on Tax Home (left panel)
  2. Scroll down to Less Common Income section.
  3. Click on Start/Revisit box next to Miscellaneous Income.
  4. Scroll to Other Reportable Income Click  Start/Revisit.
  5. Enter Description and negative amount (ex. -500).

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Patrick-id
Returning Member

Same income is reported on W-2 and 1099-MISC

I'm not sure what kind of proof I can get for not getting payment 🙂  The only money I got was payed by my employer, they all are in paystubs and hence in w-2. And this part was confirmed by my employer. 

 

Are you suggesting it's better to include the 1099 form and offset it with negative income rather than not include the 1099 at all? I'm curious about the practical difference and whether it would lead to more questions from IRS.

ThomasM125
Employee Tax Expert

Same income is reported on W-2 and 1099-MISC

By entering the Form 1099-Misc and then entering a negative adjustment to Other Income you may prevent the IRS from questioning you about the income reported on the 1099-Misc, which they would likely do if you don't list it on your tax return.

 

It is possible they may question the negative income entry as well, but perhaps less likely. I suggest you contact the company that issued the Form 1099-Misc in writing and demand that they provide you with proof that you were paid, and if not who was paid. It's possible they paid your employer and then your employer paid you. In that case, you'll have proof that you weren't paid twice. In any case, you'll have documentation supporting your claim that you weren't paid twice. You may need that to convince the IRS.

 

 

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