My father died before receiving all of his deferred compensation. I am the beneficiary of it, and received my first payment in 2018. No taxes were withheld -- the employer said FICA taxes did not apply since his death was the prior year.
I received a 1099-MISC. When I enter it into TurobTax, it treats it as business income and says self-employment tax is due. Is this correct? I thought only income taxes needed to be paid on it.
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See PDF example below that walks you through step by step.
You are correct, since your father died in the year prior to the proceeds being paid out, the proceeds are not subject to FICA taxes. They are taxable as ordinary income. To enter in TurboTax Online, while logged in to your account and in your return:
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