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Trying to understand the SERP as my mother's beneficiary and filing taxes with a 1099

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Misc Box 7. Also...
Trying to understand the SERP as my mother's beneficiary and filing taxes with a 1099 Misc Box 7. Also, should I be paying Self-employment tax if I was not employed by the company (again, I'm a beneficiary of the SERP)
Submitted: 2 years ago.Category: Tax
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7/8/2015
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,133
Experience: Taxes, Immigration, Labor Relations
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In general, a SERP is a nonqualified plan funded by the employer to provide key executives with additional retirement income.For federal employment taxation, SERP benefits are subject to Social Security and Medicare taxes -- when the related services are performed or -- when there is no substantial risk of forfeiture When reported to beneficiaries - that income is NOT subject to Social Security and Medicare taxes - and reporting the payment in box 7 is not correct.It must be reported in box 3.You would need to contact the payer and ask for correction.For payments made to your mother while she was alive - you will report on her final tax return (form 1040) - and that will be subject to Social Security and Medicare taxes - but generally all withholding must be done by the payer.
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Customer reply replied 2 years ago
Tried to get them to change it. The payer said it was correct. I believe I've filled out the 1040 form correctly on Line 21.
Tax Professional: Lev, Tax Advisor replied 2 years ago
If that form 1099MISC issued in your name or your mother's name?
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Customer reply replied 2 years ago
Mine as the beneficiary
Tax Professional: Lev, Tax Advisor replied 2 years ago
Yes - correct - report that income on line 21 - on the dotted line mark it as "inherited SERP"
However if reported in box 7 form 1099MISC - the IRS would generally expect it to be subject to self-employment taxes.
So that reporting is not correct - it should be reported in box 3.
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Tax Professional: Lev, Tax Advisor replied 2 years ago
- what to do when your 1099MISC issued incorrectly?
see page 5 in instructions
http://www.irs.gov/pub/irs-pdf/f1099msc.pdf
Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.
Let me know if you need any help or further clarification.
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Lev
Lev
Lev, Tax Advisor
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