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The employer has incorrectly categorized this payment. The payments made to you should have been reported in box 3 as "other income". You will need to call the employer to get a corrected form. Income taxes will be due on the amount you received, but if the amount is left in box 7, you would also end up owing SS and Medicare taxes on these payments, which is not correct.
Refer to the instructions for the Form 1099-MISC on page 2, under the paragraph entitled "Deceased Employee Wages". You will see in those instructions where it specifically states that the payments should be reported in box 3 and not in box 7.
You may want to give this reference to the employer when you request that a corrected form be issued.
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The employer should not have made the payments in this manner. For the year 2009 he should have continued reporting the wages under your husband's SS number and he should have withheld the proper amount of SS and Medicare taxes under your husband's SS number.
If the employer did not treat the payments in this manner, then basically he has given you a gift, and gifts are not reportable at all, and they are not deductible by the employer. And of course he is going to want to take a business deduction for the payments that were made, which is why I am sure he is reporting this to you in box 7 as non employee compensation.
Unless you want to insist that the employer go back and recategorize all of the payments the way they should have been handled in the first place, you will have no choice but to report this as self employment income and pay the SS and Medicare taxes which are due.
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