How do I report 1099-MISC investment income that is not from employment but is from quarterly interest payments on structured notes held in a joint brokerage account?

Forum|Forum|6 years ago
June 3, 2019
5 replies
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this relates to investment income and is not from any employment or services provided

TurboTax Deluxe Online

Best answer by Irene2805

UPDATED FOR TAX YEAR 2019

You can enter the 1099-MISC in TurboTax as "Other Common Income," which is reported on line 8 of 1040 Schedule 1 and will not generate Schedule C or SE tax. Please use the following steps:

Click on Federal > Wages & Income.
Scroll down to the Other Common Income section.
Click on the Start/Revisit box next Form 1099-MISC.
On the screen Did you get a 1099-MISC? click on the Yes button.
On the next screen, Let's get the info from your 1099-MISC, enter the information from the 1099-MISC.
On the following screens, answer the following questions:

Did it involve work that's like your main job? No.
You got it in 2019
No, it didn't involve an intent to earn money

Continue through the rest of the interview screens. The income will appear as Other Income.

[Edited | 4/15/2020 | 9:07am PDT]

Hal_Al

Employee

What box # on the 1099-Misc is the $ shown in?
WHY is your broker reporting this income on a 1099-MIsc, instead of a 1099-INT?

Irene2805Answer

UPDATED FOR TAX YEAR 2019

You can enter the 1099-MISC in TurboTax as "Other Common Income," which is reported on line 8 of 1040 Schedule 1 and will not generate Schedule C or SE tax. Please use the following steps:

Click on Federal > Wages & Income.
Scroll down to the Other Common Income section.
Click on the Start/Revisit box next Form 1099-MISC.
On the screen Did you get a 1099-MISC? click on the Yes button.
On the next screen, Let's get the info from your 1099-MISC, enter the information from the 1099-MISC.
On the following screens, answer the following questions:

Did it involve work that's like your main job? No.
You got it in 2019
No, it didn't involve an intent to earn money

Continue through the rest of the interview screens. The income will appear as Other Income.

[Edited | 4/15/2020 | 9:07am PDT]

Hal_Al

Employee

The income shown in box 3 of a 1099-Misc should be reported on Schedule 1, line 21.

The IRS considers anything in box 7 of 1099-MISC to be self employment income. TurboTax (TT) aggressively steers you in that direction. If you try reporting box 7 income as anything else, you chances of hearing from the IRS are very high.

jnrgarbutt

Thank you. Why is it that when I report this under 1099Misc (under Box 3) it is also reported as a Business Income (Schedule C)? Does that mean I’m being taxed twice for the same money?

Hal_Al

Employee

@jnrgarbutt - Normally an amount in box 3 is not self employment. But the TurboTax (TT) interview is designed to aggressively see it if it really is. You answered the questions in a way that TT concluded it is self employment.

What did you do to get this money. Any sort of labor or service (work) is considered self employment.

Yes, you are taxed twice. You pay regular income tax and you pay self employment tax (social security and medicare tax about 14%)

GeneToo

Tried the 2019 solution for TurboTax and the 2020 TurboTax app will not let me enter 1099-MISC income from my broker without generating a Schedule C and Schedule SE.

Is there an update to this solution for 2020 or should I just delete the Schedules after entering the 1099-MISC data?

MaryM428

On the TurboTax app

Wages and Income
Other Common Income
Form 1099-MISC
Fill in the screens and then the reason for the income
Select None of these apply for the question Do One of These Common Situations Apply?
Not like your main job
Put correct answer for How Often
No for Intent to earn money

Does 1099-MISC mean self employed:

@GeneToo

GeneToo

The 1099-MISC in question is from a broker, the income is from an investment, and the income is reported on Line 3 - Other Income.

The Subject line (above) was cut short. The rest of the story is that the 1099-MISC income is from a structured note investment with a brokerage firm.

danar3

Hello wmsrd04096

None of the answers to your question are adequate. The only way I know how to report structured investment proceeds from a 1099-MISC is to get out of "Step-by-Step" (as quick as you can - I wasted a LOT of time there) and switch to Forms. Then choose Form 1099-MISC enter the amount you received in Box 3. Do not select any of the "suggested" forms (i.e. Sch. C, Sch. F, or Form 4835), but select "Other Income" from the list that follows (below) the three (dangerous) suggestions. Your 1099-MISC will now show up on Schedule 1, line z, "Other Income" where it is supposed to be.