How do I report securities lending at fidelity?

Forum|Forum|1 year ago
March 13, 2025
2 replies
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My brokerage account lends my stocks and I receive a percentage while the securities are on loan. These proceeds were reported on my 1099-Misc. How do I report these in TurboTax?

SabrinaD2

If your brokerage account lends your stock and you received income from securities lending, reported on Form 1099-MISC in either Box 8 (Substitute Payments) or Box 3 (Other Income), here are the two options depending on the box:

Box 8 (Substitute Payments in Lieu of Dividends):

Taxation: This income is taxed at your ordinary income tax rate.
Steps in TurboTax:
- Go to the Income tab.
- Scroll down and click Add Income.
- Scroll down to Other Common Income and select Form 1099-MISC.
- Go back to Income tab select 1099-MISC and enter the information from your 1099-MISC, describing the reason (e.g., "Securities Lending Earnings").
- Proceed through the questions.
- Enter the amount in Box 8.
- TurboTax will treat this as ordinary income.

Box 3 (Other Income):

Taxation: This income is also taxed at your ordinary income tax rate.
Steps in TurboTax:
- Go to the Income tab.
- Scroll down and click Add Income.
- Scroll down to Other Common Income and select Form 1099-MISC.
- Go back to Income tab select 1099-MISC and enter the information from your 1099-MISC, describing the reason (e.g., "Securities Lending Earnings").
- Proceed through the questions.
- Enter the amount in Box 3.
- When asked if any uncommon situations apply, select "None of these apply".
- When asked if the income involved work, select "No".
- When asked if the income involved an intent to earn money, select "No".
- This will also be reported on Schedule 1, Line 8 (Other Income) of your Federal 1040 tax return.

These steps ensure that your securities lending income is correctly reported as "Other Income" and not as self-employment income.

If you needed something else reach back out with clarifying details..

Original Post

BigTegan

Can you confirm these questions come up on the online Turbo Tax entering 1099-misc line 8? The path we are presented with is employment description, etc...

When asked if any uncommon situations apply, select "None of these apply".
When asked if the income involved work, select "No".
When asked if the income involved an intent to earn money, select "No".
This will also be reported on Schedule 1, Line 8 (Other Income) of your Federal 1040 tax return.

MonikaK1

To enter income from a Form 1099-MISC that is not from self-employment, in TurboTax Online, enter Form 1099-MISC information in the section to which it pertains. In Wages and Income, there are several locations where you can enter a Form 1099-MISC.

If you enter Form 1099-MISC in the Other Common Income section, at the screen "Does one of these uncommon situations apply?", a list of options appears from which you can select that includes reasons for Form 1099-MISC other than self-employed income.

The Instructions for Form 1099-MISC state the following regarding Line 8 (note that the instructions are directed to the issuer of the form):

Enter aggregate payments of at least $10 of substitute payments received by a broker for a customer in lieu of dividends or tax-exempt interest as a result of a loan of a customer's securities. Substitute payment means a payment in lieu of:

A dividend, or
Tax-exempt interest to the extent that interest (including original issue discount) has accrued while the securities were on a loan.

In the alternative, you can enter the amount of a Form 1099-MISC under Other Reportable Income. In TurboTax Online:

Go to Wages and Income
Scroll down to Less Common Income
Go to Miscellaneous Income
Select Other Reportable Income and follow the prompts. Enter a description for the reason for the payment.

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