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1099-MISC FOR HEALTH CARE PAYMENTS

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Level 1

My client negotiated a retirement buy-out from his employer. As part of his compensation his former employer paid for medical and health care which is reported on form 1099-misc in box 6.

Proseries entries require linking this payment to a Sch C, which is not appropriate since he is retired. How else should this payment be entered?

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I would 

  • Show it as income on Schedule C
  • Deduct same amount on Schedule C, netting Schedule C to zero, labeling the expense something like "Health Care Reported in Error on 1099, picking up as income as Other Income
  • Include amount as Other Income
  • Then see if they have enough medical to report on Schedule A, including these premiums. 

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4 Replies 4
Highlighted

I would 

  • Show it as income on Schedule C
  • Deduct same amount on Schedule C, netting Schedule C to zero, labeling the expense something like "Health Care Reported in Error on 1099, picking up as income as Other Income
  • Include amount as Other Income
  • Then see if they have enough medical to report on Schedule A, including these premiums. 

View solution in original post

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Level 12

This: "As part of his compensation his former employer paid for medical and health care which is reported on form 1099-misc in box 6."

Should have been issued to the Doctor, and the Amount would be part of the W2, if it is to be considered part of compensation for the employee.

You can ask the employer to correct all of that.

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Level 11

This is playing the game of "trick the IRS computer."  I would first explain to the client that the employer screwed up, and perhaps if asked nicely could issue a corrected 1099 showing zero compensation.  Who knows, the employer might actually be interested in doing the right thing.  Box 6 is obviously the wrong thing for anyone able to read instructions in English.  Or, you can keep charging more for tax return preparation each year and hope the IRS computer doesn't select the return for audit based on strange numbers.  

But why report the payment as "other income"?  It's apparently a Health Reimbursement Arrangement -- see Notice 2002-45.  Nontaxable.  

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Level 12

@DANNI 

In this other topic, you asked again, but a bit differently:

https://proconnect.intuit.com/community/proseries-discussions/discussion/re-1099-misc-box-6-schedule...

You explained the payments are Medical Insurance Premiums.

All of this was done wrong by that employer.

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"Level Up" is a gaming function, not a real life function.