How to report free promotional stocks from Webull without paying self-employment taxes on them?

Forum|Forum|11 months ago
April 9, 2025
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Hello, I received free stocks from Webull for making some referrals. They sent me a form 1099 Composite and reported $1,203.44 on a 1099-MISC under box 3 - Other Income. I did not sell these stocks yet either. My problem is that TurboTax is treating these free stocks as business income and making me pay self-employment taxes on them. How should I report these free promotional stocks received and not have to pay self-employment taxes on them? And when I do sell them, how should the be reported?

I also have a similar issue with my Robinhood, except instead of stocks, I received a promotional $200 bonus for depositing some money into my account. They also sent me a 1099-MISC for the bonus that is being treated as business income that is subject to self-employment taxes.

Best answer by KrisD15

For the Robinhood payment, you can select

"This was a manufacturer's incentive payment" on the "Does one of these uncommon situations apply?" screen

That will make the income "Other Income" not subject to Self-Employment tax.

For the stock, that does sound like Self-Employment income and you may need to report it as such.

If this was a one-time payment, and since the payment was reported on Form 1099-MISC (rather than Form 1099-NEC) you might get away with also reporting it as an incentive payment. It would depend on how much time you spend making referrals and how much you gain for doing that. If it looks like a business, the IRS will expect Schedule C.

KrisD15Answer

For the Robinhood payment, you can select

"This was a manufacturer's incentive payment" on the "Does one of these uncommon situations apply?" screen

That will make the income "Other Income" not subject to Self-Employment tax.

For the stock, that does sound like Self-Employment income and you may need to report it as such.

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MKW31Author

Thank you, I am just going to click "This was a manufacturer's incentive payment" for both of them because the Webull free stocks were a one time payment of random stocks for referring 3 friends. I certainly don't do it enough for it to be considered a business.