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lev-tax
lev-tax, Tax Advisor
Category: Social Security
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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I was self employed insurance agent IRS when I retired

Customer Question

I was self employed insurance agent IRS when I retired they (company I represented) made payments to me over a period of 2 years for my book of business I paid income tax on this money I was shown in IRS code that I would not owe SS on it IRS now wanting me to pay SS on it (maybe company reported it wrong category on 1099 Tom Morrow
Submitted: 7 months ago.
Category: Social Security
Expert:  lev-tax replied 7 months ago.
See instructions for form 1099misc - pages 5-6https://www.irs.gov/pub/irs-pdf/i1099msc.pdfOther items required to be reported in box 3 include the following.4. Termination payments to former self-employedinsurance salespeople. These payments are not subject toself-employment tax and are reportable in box 3 (rather thanbox 7) if all the following apply.a. The payments are received from an insurancecompany because of services performed as an insurancesalesperson for the company.b. The payments are received after termination of thesalesperson's agreement to perform services for thecompany.c. The salesperson did not perform any services for thecompany after termination and before the end of the year.d. The salesperson enters into a covenant not tocompete against the company for at least 1 year after thedate of termination.e. The amount of the payments depends primarily onpolicies sold by the salesperson or credited to thesalesperson's account during the last year of the serviceagreement or to the extent those policies remain in force forsome period after termination, or both.f. The amount of the payments does not depend at all onlength of service or overall earnings from the company(regardless of whether eligibility for payment depends onlength of service).If the termination payments do not meet all these requirements, report them in box 7.
Expert:  lev-tax replied 7 months ago.
.So - first step to verify if all these requirements are metSecond - if yes - verify if the payer reported that income in box 3..I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you will all tax related issues.

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