Generally, the amount from Form 1099-MISC, Box 3 is reported as Other Income on Form 1040, Line 21. The amount reported in Box 3 may be payments received as the beneficiary of a deceased employee, prizes, awards, taxable damages, Indian gaming profits, or payments from a former employer because you are serving in the Armed Forces or the National Guard for a period of 30 or fewer days. Examples of Other Income which are not subject to self-employment tax are taxable distributions from an ESA or HSA, jury duty pay, and other taxable income from an activity not engaged in for profit. For more examples please refer to IRS Instructions for Form 1040
Conversely, if the income is from a trade or business, report the amount on Schedule C (or Schedule F if the income relates to farming). The net profit calculated on Schedule C transfers to Form 1040, Line 12 and to Schedule SE for purposes of calculating self-employment (SE) taxes. The SE tax is reported on Form 1040, Line 56. You can also deduct one-half of your self-employment tax when figuring adjusted gross income. This deduction is made automatically in the TaxACT program on Form 1040, Line 27. Generally, the payer of the miscellaneous income does not withhold income tax or Social Security and Medicare taxes from the miscellaneous income. IRS Publication 334 Tax Guide for Small Business
, has additional information regarding self-employment tax - what it is, who pays it, how it's calculated and reported, etc.
To enter or review the information for Form 1099-MISC, Box 3 Other Income
- From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab
- Click Form 1099-MISC to expand the category and then click Box 3 - Other income
- On the screen titled Federal Q&A - Form 1099-MISC, Box 3 select which schedule you will use. Form 1040 is for other income not related to a business activity, Schedule C is for Business Profit or Loss, and Schedule F is for Farming Profit or Loss. Once you have selected the topic appropriate to your tax situation, click Continue.
- The program will proceed with the interview questions for you to enter income and expense information.
If you also have federal and/or state tax withholding reported in Box 4 or 16, see Form 1099-MISC - Box 4 or Box 16.