Health Rewards from Insurance Carrier

Forum|Forum|2 years ago
March 30, 2024
1 reply
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My husband receives $600 each year in rewards from our health insurance carrier for fitness classes, sports camps, etc. He receives a 1099-MISC. In prior years I have reported it in TurboTax as Other Income without a problem. This year I enter it there and TurboTax moves it to Business Income. It then wants all the information about his business, which he doesn't have. I don't want to create a fake business just to report this income. I have no idea how to get around this issue.

Best answer by MonikaK1

You can enter the Form 1099-MISC and identify that it was not income from working so that it doesn't get misclassified as self-employment income:

Select Income from Form 1099-MISC under Wages and Income.
Enter the payer information and dollar amount
Enter a description for the payment
When asked about Uncommon Reasons, select that none apply or select one that adequately explains the reason
When asked about the frequency of payment, select received in 2023
When asked "Did (description) involve an intent to earn money?" answer No (that is, it is not earned income and therefore not subject to self-employment tax)

Form 1099-MISC is used by business payers to report certain types of miscellaneous compensation, such as rents, prizes, awards, healthcare payments, and payments to an attorney to the IRS and to the recipients of those payments.

MonikaK1Answer

You can enter the Form 1099-MISC and identify that it was not income from working so that it doesn't get misclassified as self-employment income:

Select Income from Form 1099-MISC under Wages and Income.
Enter the payer information and dollar amount
Enter a description for the payment
When asked about Uncommon Reasons, select that none apply or select one that adequately explains the reason
When asked about the frequency of payment, select received in 2023
When asked "Did (description) involve an intent to earn money?" answer No (that is, it is not earned income and therefore not subject to self-employment tax)

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AnneD1945Author

This does solve the problem as long as I check that he did not receive the income in the past and does not intend to receive it in the future; however, he did receive an equivalent reward in 2022 and could get the same in 2024. If I check those boxes, I still have the problem and it lists it as business income.

MonikaK1

You can still use this method to enter the income in TurboTax even though you may receive the payment again next year. You are reporting the income correctly as a miscellaneous payment, such as prizes or awards, that is not earned income subject to self-employment tax. It would be incorrect to report it as income from self-employment.

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