1099-Misc from the insurance company for providing attendant care for my wife after her auto accident. Not supposed to be taxed as self employment but is on turbo tax.

[czszprgr2]

Can't find a way to change this on turbo tax so I am not taxed as self employed. This is from the IRS website. Q 1: Must a taxpayer pay self-employment tax on the income she received from an insurance company to care for her spouse who was injured in an accident and permanently disabled? The taxpayer is caring for her spouse in their home in an effort to avoid moving him to a nursing facility and also to reduce care giving costs. The spouse requires assistance with dressing, bathing, eating, etc.; the taxpayer also administers medication and helps with basic physical therapy. The taxpayer is neither a trained nurse nor therapist and doesn't provide such services to anyone other than her spouse. The taxpayer received Form 1099-MISC from the insurance company with the amount paid shown in Box 3 as nonemployee compensation.

A 1: No, the taxpayer does not owe self-employment tax on amounts reported on the 1099-MISC she received from the insurance company if she is not engaged in a trade or business of providing care giving services, as appears to be the case in this situation. The taxpayer must report the full amount of the payment on line 8i of Schedule 1 (Form 1040), Additional Income and Adjustments to Income

[AliciaP1]

You should be entering your 1099-MISC as "Other Common Income" on the Income and Expenses page and not under "Self-Employment".  You will need to delete your form and re-enter it under the different income category.

To delete a specific form in TurboTax Online you can follow these steps:

1. Within your return, click on Tax Tools in the black menu on the left side of the screen.
2. Click on Tools.
3. Click on Delete a Form. 
4. Scroll down to your form and click Delete.
5. Under Federal in the black menu bar click Wages & Income to get back into your tax returns. 

Follow these steps to enter your 1099-MISC:

1. Open or continue your return
2. Select the magnifying glass and search for 1099-misc. Select the Jump-to link
3. Answer Yes to Did you get a 1099-MISC?
   • If you already entered a 1099-MISC, you'll be on the 1099-MISC Summary screen, in which case you'll select Add Another 1099-MISC
   • If you need to edit or delete a previously entered 1099-MISC, select the appropriate button
4. Enter the info from your form into the corresponding boxes
   • If you need to enter boxes 4–6 or 8–17, check My form has other info in boxes 1–17 to expand the form

[czszprgr2]

Do I need to get a new 1099-Misc from the insurance company? They have the amount received in box 6.

[czszprgr2]

I did everything you suggested. And it is still counting it as self employed. Is it because of the amount being in box 6? Should that amount have been entered into a different box by the insurance company?

[GeorgeM777 · Accepted solution]

No, the amount in box 6 is not what's causing the problem.  Based on what you posted, this income should be reported as other income on Schedule 1 of the Form 1040.  Rather than using the jump-to link, select Wages & Income, left margin, (TurboTax online), and then from Your income and expenses, scroll down to Less Common Income.  Then follow these steps:

1. Select Miscellaneous Income, 1099-A, 1099-C.
2. On the next screen, select Other reportable income.
3. Enter a description and the amount, then click Continue.

If you follow the above steps, the amount you enter should appear on Schedule 1, line 8z.  To view Schedule 1 in TurboTax online, follow the steps:

1. Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
2. With the Tax Tools menu open;
3. Select Tools.
4. Next, select View Tax Summary in the pop-up.
5. Then Preview my 1040 in the left menu.
6. To get back to the step-by-step instructions, just click Back in the left margin.

@czszprgr2

[czszprgr2]

Thank you

[cowgirlnancy]

Thank you @GeorgeM777! I had the exact same situation/issue as @czszprgr2  (thank you also and I pray your wife is getting better) with attendant/replacement care from auto injuries in Box 6  of 1099-MISC. I found the same IRS.gov "Family Caregivers and Self-Employment Tax" advice, which said self-employment tax is not owed and to put the attendant care amount in line 8i of Schedule 1, which would be "Activity not engaged in for profit income" on the 2021 Schedule 1 (for when the IRS advice was written) and would be line 8j on the 2022 Schedule 1. I followed your advice which put the amount on 2022 Schedule 1 line 8z "Other income", but since it will be treated the same way as any other income in 2022 and I can't find a way to get it to show up on line 8j, I'm going with that!

@AliciaP1 I'm not sure why the insurance company didn't just put the amount in box 3 on the 1099-MISC to begin with, unless they don't know that the person providing care isn't a professional caregiver.