Generally, the amount from Form 1099-MISC, Box 3 is reported as Other Income on Schedule 1 (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 Schedule 1 (Form 1040), Line 12 and to Schedule SE for purposes of calculating self-employment (SE) taxes. The SE tax is reported on Schedule 4 (Form 1040), Line 57. 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 Schedule 1 (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:
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.
To enter federal and/or state withholding amounts reported to you on Form 1099-MISC, use the Q&A for Form 1099-MISC, Box 3. This will transfer the federal/state withholding to the appropriate line(s) of the returns. The actual Form 1099-MISC is not electronically filed with the return, only the information that it contains. As instructed below, only the withholding entries are completed for the form and no amount would actually be entered for Box 3.
To enter or review the information for Form 1099-MISC, Box 4 or 16:
Note: If you have multiple amounts to enter you would combine them into one entry (one entry for the federal withheld amounts and one for the state withheld amounts).
Note: Any link in the information above is updated each year automatically and will take you to the most recent IRS version of the document at the time it is accessed.