Question
IRS confirmed that California "Waiting Time Penalties" are not wages for Federal Income Tax Purposes. When entering 1099-MISC, Turbotax always deducts tax
Tried all the different options to enter 1099-MISC in Turbotax (not in self-employment section). No matter the options chosen, Turbotax always deducts Federal and State Tax on that income which is not correct.
Section 203 of the California State Labor Code imposes penalties on employers that fail to pay final wages to terminated employees within a specified period of time. These penalties are paid to the terminated employees in amounts based on their wages. IRS Information Letter 2016-0026, the IRS has clarified these penalties are not considered “wages” for federal income tax purposes, because they are intended to punish employers for failing to timely pay final wages
Section 203 of the California State Labor Code imposes penalties on employers that fail to pay final wages to terminated employees within a specified period of time. These penalties are paid to the terminated employees in amounts based on their wages. IRS Information Letter 2016-0026, the IRS has clarified these penalties are not considered “wages” for federal income tax purposes, because they are intended to punish employers for failing to timely pay final wages
