1099-misc imputed benefit income

Forum|Forum|3 years ago
February 16, 2023
1 reply
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Received a 1099-misc from a legal services benefit that is basically imputed income. It shows as 'other income' in box 3, $25.00. All other boxes are blank. When I enter the dollar amount into TurboTax and continue, the program shows errors and requires business information like this is a business I have and do work for. This has always been an issue for TurboTax but this is the 1st year I have not been able to find a work around. This needs to be entered correctly as just an imputed income as a taxable benefit under 'other income'. What are the steps to correctly enter this information without it being reported as a business I have?

Best answer by DawnC

You need to delete the Schedule C completely (use instructions in that link) and delete the 1099-MISC entry that created it (don't try to edit it, it won't work). After you get rid of the 1099 and the Schedule C, re-enter the 1099-MISC, but make sure you answer the follow-up questions as instructed below. If you enter it like this, the income in box 3 will go to Schedule 1, Line 8 and it will be included in ordinary income on your tax return and will not require the business info. But you have to delete the entire Schedule C and 1099 form you started BEFORE you can enter it correctly.

Go to Other Common Income

Income From 1099-MISC

Answer YES

Enter the Payer name, Fed ID #, and Box 3 amount

Description > imputed income or something similar

None of these apply

No - doesn't involve my main job

I got it in 2022 - - Mark only this box - you should only have 1 checkmark on this screen

No - doesn't involve the intent to earn money

Done - no schedule C required

You should verify that you do not owe Self-Employment tax on this income. If this is considered ''earned income'', social security and medicare tax (FICA and SE tax) are owed.

JamesG1

Report this as 1099 income that is not self-employment income.

Follow the steps below to report income on an IRS Form 1099-MISC.

Select Federal from the left side menu.
Click on Wages & Income.
Scroll down to Other Common Income. Click Show more.
Click Start / Revisit to the right of 1099-MISC.
Enter a description under Describe the reason.
Select 'None of these apply' at the screen Does one of these uncommon situations apply?
Select 'No' at the screen Did the income involve work.
Select 'No' at the screen Did the income involve an intent to earn money?

The entry will be reported:

on line 8z of Schedule 1 of the Federal 1040 tax return, and
on line 8 of the Federal 1040 tax return.

View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

@Robotdriver

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RobotdriverAuthor

That is the same answer all have said to do but no matter what the program shows 9 errors.

1)Accounting method

2)Material Participation Boxes must be entered

3)Business Name

4)Schedule C Required to file 1099 must be entered

5)Schedule C Zip Required

6)Address must be entered

7)City must be entered

8)Principal Business Code must be entered

9)State must be entered

DawnCAnswer

Employee