1. Other Income Pub 4012 – Tab D Pub 4491 – Lesson 16 #2 added text
#6 removed reference to box 6 in first bullet; removed speaker notes (related to Medicaid waivers)
#7 added re wrongfully incarcerated income exclusion
#9 changed to reflect that every 1099-MISC must be input into TaxSlayer

2. Intake/Interview
Qualified home mortgage debt forgiveness is covered in Lesson 23a
Medicaid waiver payments are covered in Lesson 23b
An effective interview is critical
Income reported by TP should make sense – need to inquire about sources of income
NTTC Training – TY2016

3. Form 1040 – Line 21 Many types of income will end up on line 21
NTTC Training – TY2016

4. In-Scope Examples Reported on 1099-MISC, Box 3
Pub 17, pg 94
Reported on 1099-MISC, Box 3
Reported on 1099-MISC, Box 7 – but “not a business”
Gambling winnings including lotteries and raffles
Taxable amount of long term care (1099-LTC)
Cancellation of debt (credit card or main home only)
Other:
Jury duty pay and poll worker pay (not on W-2)
Prizes and awards
Medical study subject pay
Income from all sources must be reported, unless specifically excludible
Includes:
Illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C if from your self-employment activity
A free tour from a travel agency for organizing a group of tourists must be included as income
Refund or reimbursement of an item deducted in an earlier year (Form 1040) must generally be included as income in the year received, subject to the tax benefit rule
Whether or not reported on Form 1099-MISC
Form 2555 exclusion of foreign earned income is in scope with International certification only
NTTC Training – TY2016

5. Out-of-Scope Examples
Pub 17, pg 94
Bartering income – property or services exchanged for property or services
Activity not entered into for profit
Hobby income
Rental income, even if “just to help cover the costs”
Cancelation of debt other than nonbusiness credit cards or qualified main home
Taxable distributions from
Education savings account
ABLE account
NTTC Training – TY2016

6. Other Income Does NOT include 1099-MISC income that is business income
Report on Sch C instead
Does NOT include rent or royalty income
Report on Sch E, or on Sch C if from personal services, instead
DOES include income not reported on other lines of Form 1040
If the taxpayer receives less than $2,000 and is properly considered a household employee, the income may be reported as household employee income (Form 1040 Line 7) – see slide deck #12
NTTC Training – TY2016

7. Other Income
Does NOT include civil damages, restitution, or other monetary awards that the taxpayer received as compensation for a wrongful incarceration
Amended return needed for prior year if included in taxable income
A “wrongfully incarcerated individual” is either:
1) An individual who was convicted of a criminal offense under federal or state law, who served all or part of a sentence of imprisonment relating to such offense, and who was pardoned, granted clemency, or granted amnesty because of actual innocence of the offense, or
2) An individual for whom the conviction for such offense was reversed or vacated and for whom the indictment, information, or other accusatory instrument for such offense was dismissed or who was found not guilty at a new trial after the conviction was reversed or vacated.
This PATH provision applies to tax years beginning before, on, or after the date of enactment.
Note: claims for 2012 and prior had to be filed by December 19, 2016 – special exception to statute of limitations for this compensation
If improperly reported on 1099, enter and remove with a negative offsetting other income amount
NTTC Training – TY2016

8. Entering Other Income in TaxSlayer
Form 1099-MISC (for box 3 only)
Quick File
Taxpayer profile (if set up)
Form search box
Summary/Print view (click line 21) for all other types of income
Summary/Print is easiest to get to Other Income screen
In Quick File, select W-2G for gambling income
Most other will be 1099-MISC
In TaxSlayer Form 1099-MISC, box 3 is “Other Income”
NTTC Training – TY2016

9. 1099-MISC TaxSlayer takes only box 3 to Other income (line 21)
1099-MISC box 7 that is not a business
Must input income in TaxSlayer Form 1099-MISC “Other Income” (as if Box 3)
All other income, click on line 21 in 1040 view
All taxpayer 1099-MISCs must be input in TaxSlayer Form 1099-MISC
1099-MISC with box 3 USUALLY is NOT a business – must interview to determine
If box 3 income relates to a business, input on “Nonemployee compensation” on TaxSlayer Form 1099-MISC
1099-MISC with box 7 USUALLY IS a business – must interview to determine
If box 7 income does not relate to a business, input on “Other income” on TaxSlayer Form 1099-MISC
e.g. cash tips, report on Sch C not on Line 21
See NTTC training slide presentation “23c Income Form 1099-MISC TY16 Rel 2”
NTTC Training – TY2016

10. Income > Other Income
See Wages lesson
Select type of income
OOS if any is taxable
OOS
OOS
See K-1 lesson
OOS
International certification required
NTTC Training – TY2016

11. Other Income Not Reported Elsewhere
Use Federal Section > Enter Myself > Income > Other Income for
Gambling not on W-2G
Jury duty pay, prizes, etc.
NTTC Training – TY2016

12. Gambling Income (W-2G) Select W-2G if reported on that form
Copy data from tax form
Losses are manually computed and entered as itemized deduction on Schedule A (cannot exceed total winnings)
Gambling winnings are generally determined on a per-session basis
Taxpayer must keep detailed records
If no W-2G received, enter on prior screen – Other income
Be sure to limit Sch A L 28 gambling losses to no more than net gambling winnings reported in Line 21
Must be done manually
Taxpayers must keep detailed records of their gambling sessions and winnings or losses
Sessions that result in losses may be deducted, if itemizing, enter on Sch A Line 28 (not subject to 2%)
Note: states may tax gambling income differently and limit losses differently
NTTC Training – TY2016

13. Other Compensation
Covered in wages lesson
NTTC Training – TY2016

14. Long Term Care Payments
Reported to taxpayer on Form LTC
Complete Form 8853, Section C
Sections A and B remain out-of- scope
Must enter taxpayer separately from spouse, if both are receiving LTC benefits
NTTC Training – TY2016

15. Long Term Care Payments
LTC Insurance Contracts
Generally, reimbursements are not taxable (reimbursements do not normally exceed actual costs)
Per diem costs up to an aggregate limit of $340/day are non-taxable
NTTC Training – TY2016

16. Accelerated Death Benefits
Insured has been certified by a physician as terminally ill
Fully excludible
Certified as chronically ill
Treated the same as paid under a qualified long-term care insurance contract
NTTC Training – TY2016

17. Long Term Care Payments 1099-LTCXX
Review form contents
Gross paid
Whether per diem or reimbursed actual
Qualified contract (not required)
Whether chronically or terminally ill
NTTC Training – TY2016

18. Long Term Care Payments
If there are multiple payees under the insurance contract, refer the taxpayer to a paid preparer
NTTC Training – TY2016

19. Long Term Care Payments
Complete Form 8853 LTC section
Search 8853
Unreimbursed medical expenses can be deducted on Schedule A if itemizing
Note: searching for 1099-LTC or long term care do not work in Practice Lab
NTTC Training – TY2016

20. Form 8853 LTC Section
Usually, none is taxable
NTTC Training – TY2016

21. Cancelation of Debt Income (CODI)
Lenders must issue Form 1099-C if cancel $600 or more of debt
Less than $600 must also be reported as income by taxpayer
Canceled debt income is reported on Form 1040, Line 21
NTTC Training – TY2016

22. Credit card debt only if nonbusiness
Form 1099-C
In box 2
Credit card debt only if nonbusiness
An amount in box 3 can be ignored as it is included in box 2
Because only nonbusiness credit card debt is in scope, any interest forgiven is also income.
NTTC Training – TY2016

23. Cancelation of Debt Income (CODI) In-Scope
Nonbusiness credit card debt
Main home exclusion of debt forgiveness (see separate lesson)
NTTC Training – TY2016

24. Cancelation of Debt – Credit Card
Pub 4012 – pg D-32
Credit card debt – nonbusiness only
Taxpayer must be solvent immediately before debt canceled
Value of assets exceeds total amount of liabilities
Not in bankruptcy
Otherwise out-of-scope
Generally, if a debt for which a taxpayer is personally liable is canceled or forgiven, the taxpayer must include the canceled amount in income. There is no income from canceled debt if the cancelation or forgiveness of debt is a gift or bequest.
NTTC Training – TY2016

25. Form 1099-C – Taxable Income
If 1099-C received, enter taxable amount and data from tax form
If no 1099-C received, use “Other Income” (discussed above)
NTTC Training – TY2016

26. Income – Quality Review
The final question with respect to income:
Did you have any other income?
Remember, all income is taxable (unless the law says it’s not)
NTTC Training – TY2016

27. Other Income
Comments
Questions
NTTC Training – TY2016