I see other similar posts that Turbotax overcharging tax due from the reported income on a 1099-MISC for credit card incentive bonuses (unless there is a better way to document).
I received a 1099-MISC from Chase for $1150 for credit card referral bonuses, which I understand are taxable.
What I'm seeing in forums is to document the income on the 1099-MISC as SPIFF then click "this was a manufacturer's incentive payment."
I have entered the information multiple ways and this continues to increased my federal taxes by $447 no matter what I click when I enter it. This is 38.8%, when I'm in the middle of the 35% tax bracket.
Can anyone give me a reason why I'm paying 38.8% on this? Do I need to enter it in a different way? Is this a Turbotax error?
Thanks,
Tood
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When you enter one taxable transaction, you can't just watch the monitor. You increased your overall adjusted gross income and with that come many other changes in your return, not just the incremental tax on the one transaction. More income can make more of any Social Security taxable and can increase or decease any credits you qualified for.
Sure anything can happen. I once added just $6 of interest and my tax due went up $12! I was right at the line and it pushed me into the next tax bracket. And it increased your AGI and that would decrease some deductions if you itemized on Schedule A. And by increasing your AGI it might reduce some credits you were getting like EIC.
The extra 3.8% is Medicare Net Investment tax.
https://www.irs.gov/individuals/net-investment-income-tax
Boom. There it is. Thanks.
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