Self employment tax 1099

[gortlep]

I inherited my husbands deferred comp plan.  He passed away in 2015, this year it is charging me self employment tax on the amount, is this correct?  Or should this be ordinary income?

[DianeW]

If you are not self employed there should be no self employment tax.  If this is reported to you on a Form 1099-MISC, then it should be reported as other income.

If it is reported on a Form 1099R then it should be reported as retirement income without a penalty because you are the beneficiary.

Form 1099-MISC: Report the amount in box 3 (other income)

In TurboTax (online or desktop) follow these steps to reach this result. 

• Federal Taxes > Wages & Income > Other Common Income > Income from Form1099-MISC > Update 
• Edit > Continue (if all your information is there and the income is in box 3)
• Type Descriptiion, if necessary
• Continue > Check None apply
• No it did not involve work
• Select got it in 2016
• No it didn't involve an intent to earn money
• Finish

This will place the amount on line 21 as it should. You can review your return by using the steps here.

Form 1099R - Retirement/Death Benefit

While you are signed into your TurboTax (online or desktop) version:

1. Use the Search box in the upper right

2. Search for 1099r

3. Jump to 1099r (image attached)

4. Continue to enter your Form 1099R from the statement