Your Life

Your Life

Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.

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Valued Pioneer
Posts: 3
Registered: ‎04-16-2018
Accepted Solution

1099 MISC box 3 and mileage

Hello,

 

I have a question regarding 1099-MISC. My daughter was a student-athlete at DIV I University. Last year the team went to the NCAA championships and parents of team members were reimbursed up to $800 for their travel cost by the University. This payment is documented on a 1099-MISC box 3 Other Income which flows to line 21 of the 1040 and not schedule C. Since you must travel to the event site in order to be reimbursed would one be able to deduct travel mileage to/from the event site? If so, where would this be reported?

 

Thanks

Moderator
Posts: 113
Registered: ‎01-08-2018

Re: 1099 MISC box 3 and mileage

Hello BrianP1300!

 

Welcome to The H&R Block Community!

 

The best way to enter this in to be able to deduct your travel expenses in full may be to claim it on the Schedule C as business income. Then you can deduct travel expenses directly onto the Schedule C. If your expenses exceed your income, you may then claim a loss that may be put against your other income, reducing your tax liability. This will then allow you to deduct these expenses while still taking the standard deduction. 

 

If you were to leave the 1099-MISC on line 21 and deduct the expenses as "hobby" expenses on the Schedule A, the expenses must be at least 2% of your adjusted gross income. Then only the amount above that 2% would be deductible as a hobby expense and you will have to itemize your deductions for it to be deducted. 

 

If you have any further questions, I'll be happy to help!

 

Alex

Tax Research Specialist

Valued Pioneer
Posts: 3
Registered: ‎04-16-2018

Re: 1099 MISC box 3 and mileage

Alexandral, Thanks for answering the my questions on the original post. I have a follow-up that the answer is implied in your response, but I'd like to clarify. What you suggested was what I thought might be an appropriate approach, with the understanding that it's acceptable to override the decision to flow the income to the 1040 form and place it on schedule C? Is there any reason why the university would not show this income box 7 where it would naturally flow to schedule C? Thanks again, Brian
Council Member
Posts: 548
Registered: ‎04-06-2016

Re: 1099 MISC box 3 and mileage

Referring to the first paragraph of the Schedule C instructions: https://www.irs.gov/pub/irs-pdf/i1040sc.pdf , "Use Schedule C (Form 1040) to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the instructions for Form 1040, line 21, or Form 1040NR, line 21." 

 

I think the correct way to report this is as the H&R Block Program is defaulting-- on Line 21 as other income and then deduct the travel expenses on Schedule A which would be subject to the 2% floor.  Your case doesn't fit the "business" definition above, so claiming the income on Schedule C would likely raise questions.  

Regarding your question about why it wasn't reported on Line 7 of 1099-MISC, it's because that box is for non-employee compensation (which would typically be subject to self employment taxes). The money you received wasn't really compensation for a service provided-- it was a reimbursement for your expenses.

 

 

Karen

Valued Pioneer
Posts: 3
Registered: ‎04-16-2018

Re: 1099 MISC box 3 and mileage

Karen,

 

    Thanks for the reply, your answer addressed my concern regarding filing this as a business expense.

 

Brian