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boatgal
New Member

I received a christmas bonus on a 1099-misc as "other income". Why is it considered business income and it's trying to get me to go through working on business income?

I don't understand why turbo tax considers it business income and wants me to go through the interview about business income and expenses?
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5 Replies
boatgal
New Member

I received a christmas bonus on a 1099-misc as "other income". Why is it considered business income and it's trying to get me to go through working on business income?

Yes box 3
Carl
Level 15

I received a christmas bonus on a 1099-misc as "other income". Why is it considered business income and it's trying to get me to go through working on business income?

The IRS considers it business income. The employer should have included it in your W-2 and when the IRS catches it (they will) the employer will be fined. Meanwhile,there is a way to avoid that DEPENDING on what box the income is reported in, on the 1099-MISC. Can you confirm that it is in fact, box 3 please? Then I can walk you through it.
Carl
Level 15

I received a christmas bonus on a 1099-misc as "other income". Why is it considered business income and it's trying to get me to go through working on business income?

First, delete the existing 1099-MISC entry.

Select the Wages & Income (or Personal Income) tab and then "I'll choose what to work on"

Scroll down to Other Common Income and elect to start/update Income From Form 1099-MISC

If there is anything listed there, it would be the 1099-MISC you entered incorrectly. Just click the Delete button to the right of it, then click YES to confirm the delete. Then click the DONE button to return you back to the Personal Income list. (If there's nothing listed there, just click the BACK button.

Now select the Business tab, then Continue, then "I'll choose what to work on"

Elect to start/update Business Income & Expenses (SCH C).

If there's anything listed there, click the Delete button to the right of it, then YES to confirm the delete, then click DONE. If nothing is listed there, then click BACK.

Now back to the Personal tab and select Personal Income, followed by "I'll choose what to work on"

Scroll down to Other Common Income and elect to start/update Income From Form 1099-MISC

Click YES, and then enter the 1099-MISC exactly as printed. I am assuming the only box with income reported in it, is box 3, and no other. (this matters) After entering the 1099-MISC, click Continue.

For the reason, enter something such as Christmas Bonus for 2015 and click continue.

Select "none of these apply" and click Continue.

Select NO and continue. (Just do it. Otherwise, it's business income and you WILL pay self-employment tax)

Select 2015  "ONLY" and Continue.

Select NO, it dodn't involve an intent to earn money" and Continue.

Select NO and continue.

 Click DONE, and that's it.

Now, you "may" think you're being dishonest with those NO selections, but you're not. You clearly described the money reported in box 3 for "exactly" what it was - a Christmas Bonus. As stated above, that "should" have been reported on your W-2. But since your employer did not report it on the W-2 as required, you are not penalized with the SE tax. It's your employer that will have to answer to the IRS - not you.

boatgal
New Member

I received a christmas bonus on a 1099-misc as "other income". Why is it considered business income and it's trying to get me to go through working on business income?

Thank you very much for your help.  I've done exactly what you recommended.

I received a christmas bonus on a 1099-misc as "other income". Why is it considered business income and it's trying to get me to go through working on business income?

mine has $ listed in box 7

 

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