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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience:  15years with H & R Block. Divisional leader, Instructor
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I was subpeoned to testify as a paid witness in a hearing during

Customer Question

I was subpeoned to testify as a paid witness in a hearing during 2009 and received over $11,000 for my testimony by the lawfirm that needed that testimony. The law firm is preparing a form 1099 MISC to send to me for income tax reporting purposes. They indicate that the IRS instructions tell them to report this paid witness fee on line 7, "non employee compensation", rather than line 3 "other income". Turbo Tax defaults to the section for payment of self-employment social security tax when I enter the 1099 MISC as income from line 7, but does not default to self employment social security tax when I enter it on line 3 of 1099 MISC. The law firm insists on putting my income on line 7 which makes it appear that I owe self employment social security tax and I am not self employed. How do I work my way around this issue
Submitted: 4 years ago.
Category: Tax
Expert:  Robin D. replied 4 years ago.

HelloCustomer

According to the IRS your fee received for witness is reported as Non Employee Compensation.

You do not necessarily have to "have a business," but simply perform services as a nonemployee to have your compensation treated this way. The payer has determined that an employer-employee relationship does not exist in your case.

Here is a link to the IRS Instructions for 1099MISC

http://www.irs.gov/instructions/i1099msc/ar02.html#d0e863

 

I sincerely XXXXX XXXXX information is helpful,

Customer: replied 4 years ago.
I already knew all that you have provided. Since the income defaults to an indicator that I may be subject to self employment social security tax when I am in fact retired and not engaged in self employment and since I was required by subpeona to testify and was compensated for this testimony in the civil case, my main concern which is not in any way addressed in your response, is how do I eliminate any notion that I need to pay the self employment social security tax?
Expert:  Robin D. replied 4 years ago.

Hello again,

The Self Employment tax will be required on this income you received for the witness. This is unfortunate since you were basically "forced" to do what you did to receive the money.

I truly wish I could advise other,

Customer: replied 4 years ago.
I will pay you for your answer but before I do, I need you to advise me exactly where in the IRS code you found this conclusion. I intend to do battle over this issue if in fact your answer is accurate. But before I accept defeat on paying self employment social security I definitely want to verify your answer by visiting the source where you obtained it.
Expert:  Robin D. replied 4 years ago.

Hello,

I have placed a link to the instructions for 1099MISC Box 7

 

http://www.irs.gov/instructions/i1099msc/ar02.html#d0e863

 

 

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Robin D.
Robin D.
Tax Professional
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15years with H & R Block. Divisional leader, Instructor