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, Line 21.
To access Other Income in Keystone Tax Solutions ProWeb from within the Federal Section, select:
- Income Menu – Enter Myself
- Form 1099-MISC – Begin
- Form 1099-MISC- Input Information
- Continue – when finished
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 ProWeb from within the Federal Section, select:
- Income Menu – Enter Myself
- Form 1099-MISC –
- Form 1099-MISC- Input Information
- Continue – when finished
To link the MISC. Income to a Schedule C after selecting Continue:
- Click on + Create a New Schedule C Income from Business – OR – select the blue Add button to a preexisting Schedule C
- Click Add a Form 1099-MISC to add an additional 1099-MISC
To access Schedule C in Keystone Tax Solutions ProWeb from within the Federal Section, select:
- Income Menu – Enter Myself
- Profit or Loss From A Business Schedule C – Begin
Enter in the Business Name, EIN, Business Address for the Taxpayer’s or Spouses. DO NOT enter the information off the 1099-MISC. If you prepared the return using the software in the previous year, the program will automatically pull the data forward.
Enter a Business Code. This is a code used by the IRS to classify the type of business being operated:
Select: Click here for a list of Business Codes to view an entire list of activity codes. Once you have found the business codes, double-click the program will automatically enter it for you.
Schedule C Questions About the Operation of Your Business 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.
Income generated by the business will be entered on the Schedule C Income Menu. To enter the income obtained by the business, select ‘Begin and/or Edit’ on Income. The Income Menu has several income items broken down by sections. Enter the income in the Gross Receipts or Sales, Income reported to you on Form W-2 as Statutory Employee, Returns and Allowances or Other Income.
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.
Expenses incurred by the business can be entered by selecting ‘Begin and/or Edit’ on General Expenses. Expense items such as advertising, repairs, utilities, and meals & entertainment can be deducted.
Car & Truck Expense, such as standard mileage and actual expenses, can be entered by selecting ‘Begin and/or Edit’
- Enter all vehicle information
- Click Continue
- Click Add a Schedule C Car and Truck to add an additional vehicle. -OR- Continue
Depreciation can be entered by selecting ‘Begin and/or Edit’
- Click on Assets
- Enter Description, Date placed in service, Cost, Percentage of business use, Section 179 (if taking deduction), Prior year special depreciation, Accumulated depreciation, Depreciation method, Useful life, mid-quarter property, If asset was disposed enter the date of disposition (sold), Listed Property Information
- Continue
- Add Another -OR- Continue
Expenses not listed under Expenses can be Itemized with descriptions under Other Expenses.
Business conducted in one’s home should enter the square footage or area used for business purposes. To enter this information select Begin, Expenses for Business Use of Your Home.
NOTE: This is a guide on entering Form 1099-MISC into the Keystone Tax Solutions ProWeb program. This is not intended as tax advice.