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Form 1099-MISC, Miscellaneous Income

Form 1099-Misc is used to report any miscellaneous income to a taxpayer that would not be included on a Form W-2.  This income can be for services, rents, royalties, prizes, etc.  Generally, any amounts in box 3 of the Form 1099-Misc can be reported as Other Income on Form 1040.

Any amounts reported in box 7 are generally non-employee compensation.  If payments in this box are self-employment income, report this amount on Schedule C, C-EZ, or F (Form 1040).  The taxpayer received this form instead of Form W-2 because the payer did not consider them an employee and did not withhold income tax or social security and Medicare tax.
NOTE: If the taxpayer believes that they are an employee and cannot get the payer to correct this form, report the amount from box 7 on Form 1040, line 7 (or Form 1040NR, line 8).  You must also complete Form 8919 and attach it to the return.

To access Other Income in Keystone Tax Solutions 
from the Main Menu of the Tax Return (Form 1040) select:

Income Menu

Other Income (W-2G, 2555)

Other Income
Select ‘New’ Input Information
To access Schedule C in Keystone Tax Solutions from the Main Menu of the Tax Return (Form 1040) select:

Income Menu

Business Income/Loss (Sch C, C-EZ, 1099MISC)

Select ‘New’ or double-click the entry you wish to ‘Edit’.  Select ‘Pull’ if you prepared the return using the software in the previous year and wish to pull the data forward.

Select Schedule C or Schedule C-EZ

Enter a Principal Business Activity Code.  This is a code used by the IRS to classify the type of business being operated.  If you do not know the code, you have two options:

You can select the PDF Icon to view an entire list of activity codes, or

You can select the Magnifying Icon to search by category.  If you search by category, double-click on the business code that represents the type of business and the code will fill in automatically for you.

Input the heading information in the Schedule C Data Entry Menu. This will include the name of the business, the business address, and the zip code.  The city and state information will fill in automatically based on the zip code that is entered.

At the Schedule C Questions Menu, there are several items that need review.  The questions on this menu are defaulted to the most common answers for most taxpayers.  However, review these questions to make sure the answer provided is correct for the taxpayer’s situation.  You may need to adjust one or two items to reflect the way the taxpayer’s business is operated.

If there was a prior year unallowed loss, enter the amount on the Questions menu.  CAUTION: Only enter an amount here if current year’s activity is a net profit.  If current year’s activity has a net loss, an amount entered here will cause an incorrect calculation.

 generated by the business will be entered on the Schedule C Income Menu.  To enter the income obtained by the business, select ‘Income’ on the Schedule C – Edit Menu.  The Income Menu has several income items broken down by sections.  Enter the income in the Gross Receipts or Sales menu.  If inventory is kept throughout the year, enter the beginning and ending inventory amounts in the Cost of Goods Sold section.  Also enter the cost of labor and the amount spent on materials and supplies for the business.

 incurred by the business can be entered by selecting ‘Expenses’ from the Schedule C – Edit Menu. Expense items such as advertising, repairs, utilities, and meals & entertainment can be deducted.  Depreciation and car & truck expense, such as standard mileage and actual expenses, can be entered in the expense menu.

Updated on July 10, 2018

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