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yoshl
Level 1

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

I earned some returns on crypto lending platforms and received 1099-misc from these companies.
Now Turbo tax is asking me what my business does and questions like "Tell us about how long you've worked in" this business even though this isn't a business or money I earned for work I did. How do I proceed?

10 Replies
tagteam
Level 15

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

Critter-3
Level 15

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

If this is a 1099-misc box 3 situation then you are in the WRONG place ... delete the unneeded Sch C and enter it this way instead :

 

  • Down the left side of the screen, click Federal.
  • In the center of the screen, click Income & expenses.
  • On the screen Your income and expenses, scroll all the way down to the last section, Less Common Income.
  • Click the Start or Update button for the last topic, Miscellaneous Income, 1099-A, 1099-C.
  • On the next screen, Let's Work on Any Miscellaneous Income, scroll down and click the Start or Update button for the last topic, Other reportable income.
  • The next screen asks, Did you receive any other taxable income. Click Yes.
  • On the next screen, Other Taxable Income, enter a description and the amount. Click Continue.
  • On the next screen click Done.

The income will be reported on Schedule 1 line 8 with the description that you entered. 

 

yoshl
Level 1

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

I go to "Other Taxable Income" like you suggested and it says "do not enter income reported on Form 1099-Misc" 
The amounts are in Box 3 like you say but they are reported on Form 1099-Misc. 

I also read that the IRS already knows how much they expect to see reported on 1099-Misc so if that amount doesn't match they will flag it and audit. Are you sure this is the right way to do this?

Critter-3
Level 15

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

OK ... you can follow the screen instructions that got you lost the first time  OR  follow mine and be done with it.  Your choice.

fanfare
Level 15

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

1099-MISC was recently split into 1099-MISC and 1099-NEC.

1099-NEC is used for non-employee compensation (Schedule C)

1099-MISC is for Other Income.

 

@yoshl 

yoshl
Level 1

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

Does the IRS give me the choice to treat a 1099-misc I received in the mail as a 1099-nec? 

How does one determine if a 1099-misc I received in the mail can actually be filed as a 1099-nec?

@Critter-3 on this thread claims, I can just enter it under 'Less Common Income" or "Miscellaneous Income" and bypass reporting it as any kind of 1099 all together. "The income will be reported on Schedule 1 line 8 with the description that you entered. "

Critter-3
Level 15

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

First ... if you want to put it on the Sch C and pay SE taxes on the income then the IRS will not mind it.  Otherwise it is a Sch 1 line 8 entry.

 

Follow these directions to post 1099-Misc, box 3 income not subject to self-employment taxes.

  • Down the left side of the screen, click Federal.
  • In the center of the screen, click Income & expenses.
  • On the screen Your income and expenses, scroll all the way down to the last section, Less Common Income.
  • Click the Start or Update button for the last topic, Miscellaneous Income, 1099-A, 1099-C.
  • On the next screen, Let's Work on Any Miscellaneous Income, scroll down and click the Start or Update button for the last topic, Other reportable income.
  • The next screen asks, Did you receive any other taxable income. Click Yes.
  • On the next screen, Other Taxable Income, enter a description and the amount. Click Continue.
  • On the next screen click Done.

The income will be reported on Schedule 1 line 8 with the description that you entered. 

 

 

yoshl
Level 1

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

I know that this is what you do if you want to report income without paying SE Tax and Medicare. 

What I'm asking is, is this legal to do, especially give that I received a 1099-Misc which usually you pay SE and Medicare tax for. 

 

fanfare
Level 15

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

1099-MISC was recently split into 1099-MISC and 1099-NEC.

1099-NEC is used for non-employee compensation (Schedule C)

1099-MISC is for Other Income.

 

@yoshl 

Critter-3
Level 15

TurboTax is asking me questions about my "business" because I received a 1099-misc from a crypto lending platform. How do I proceed?

Yes it is legal ... some 1099-misc box 3 forms can still be considered  self employment depending on the circumstances.

 

Box 3 is a "catch all"  and used when the amount entered doesn't belong on any other form/box and it is up to the reveiver to put it on the tax return in the proper place. 

 

Read the instructions: https://www.irs.gov/pub/irs-pdf/i1099mec.pdf

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