Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

Divorced taxpayer received a pay out from Netflix, her

former spouse's employer. Her former...
divorced taxpayer received a pay out from Netflix, her former spouse's employer. Her former spouse earned these shares while he was an employee of Netflix. She received this money as part of the divorce settlement. The amount, $1,355,638.26, is included box #7, nonemployee compensation of form 1099-MISC. The taxpayer has a W-2 of about $200,000, so the SE tax would be about 2.9% or about $36,300. The spouse earned those shares while working as an employee, and the taxpayer never performed any nonemployee services for Netflix.
Is there authority you know of that could justify the argument the taxpayer in question here is not liable for self-employment tax?
Show More
Show Less
Ask Your Own Tax Question
Answered in 17 minutes by:
3/17/2018
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,123
Experience: 35 years tax experience, including four years at a Big 4 firm.
Verified

Hi from Just Answer. I'm PDtax, and can assist.

Ask Your Own Tax Question

It sounds like this is a property settlement incident to divorce. As such, the agreement between the parties will dictate the character of the payout to your client, property settlement or alimony.

In either case, this will not be subject to self employment tax. In fact, it might not be taxable to your client at all, but instead be taxable to her ex-spouse and simply remitted to your client.

First, determine the character of the payout. Netflix does not have RSUs or similar compensation (like Amazon), but they do have a stock option plan, which this sounds like is the source. If that's the case, there may be tax consequences on the sale, but again, the agreement or decree will dictate treatment.

Then, determine property settlement or the potential lump sum alimony settlement. This is rare, but still used, rarely because of the potential for recapture tax.

I hope this covers the topic for you. If so, please rate my assistance with positive feedback, five stars being best, ***** ***** your request. I'm PDtax.

Ask Your Own Tax Question
Customer reply replied 5 months ago
I am aware that property settlements incident to divorce are not generally taxable. Do you have an authoratitive citation to support that? How do I counter the presumption that nonemployee compensation is subject so SE tax?
I believe the 1099-misc was issued in error. This is not applicable to any of the potential tax treatments.With 1099-misc errors, we report then as the form suggests, then create an expense such as "nontaxable divorce distribution, 1099 received in error from SSN ---------".Since I don't know what kind of payment this is, researching isn't applicable. If you need this researched, please advise what this payment is really for. I'll post an offer for the research time.If that's not needed, positive feedback is appreciated, five stars being best. I'm PDtax.
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,123
Experience: 35 years tax experience, including four years at a Big 4 firm.
Verified
PDtax and 87 other Tax Specialists are ready to help you
Ask your own question now
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask PDtax Your Own Question
PDtax
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,123
5,123 Satisfied Customers
Experience: 35 years tax experience, including four years at a Big 4 firm.

PDtax is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
I am settling a long term disability ERISA lawsuit against
I am settling a long term disability ERISA lawsuit against my insurer and my employer. The insurer will pay 75% of the settlement and my employer will be paying 25%. I know it is all taxable income to… read more
abci168
abci168
Principal
27 satisfied customers
Taxpayer is an attorney currently on the payroll of a law
Barbara; Taxpayer is an attorney currently on the payroll of a law partnership (an LLC taxed as a partnership) getting a W-2 of about $120,000 per year. She used to be a general partner who earned sel… read more
Matthew Breecher
Matthew Breecher
President
MBA (Graduate Legal Studies)
286 satisfied customers
I just paid a lawsuit settlement and need to issue them a 1099 JA:
I just paid a lawsuit settlement and need to issue them a 1099 … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
A salesman receives a monthly car allowance from s employer
A salesman receives a monthly car allowance from his employer & is issued a 1099-MISC for it. It is not earned income. He reports it as "Other Income" on Form 1040, page 1,line 21. The IRS sends him a… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Former Kay Director of sales receives about $150,000 per
Former Mary Kay Director of sales receives about $150,000 per year and receives a 1099-MISC that reports the income in box #7, Miscellaneous non-employee compensation. The Mary Kay company position is… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
Pursuant to my divorce, my ex-spouse will be awarded some RSU
Pursuant to my divorce, my ex-spouse will be awarded some RSU and NQ option. I understand the IRS ruling 2004-60, where the non-employee spouse will be credited for the wages and taxes from the vestin… read more
Anne
Anne
Master Tax Preparer
1,328 satisfied customers
Thank you! Divorcing,wife owe $100,000.00,Back tax,dba,ira,not
Thank you! Divorcing,wife owe $100,000.00,Back tax,dba,ira,not joint,separate,they will only talk to her,or her power of attorney,need interpretation of tax law,?do I have to pay her personal business… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
My wife and I are planning an amicable divorce. However, we
My wife and I are planning an amicable divorce. However, we want to make the best financial decision we can, and structure things most effectively, even if it means putting off divorce. I have my own … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Letter from IRS for 2010 Federal Income Tax I helped my
Letter from IRS for 2010 Federal Income Tax I helped my daughter's 2010 tax filing by H&R Block software. She is a single college senior and it was her first filing. She got a signing bonus of $13,300… read more
Jax Tax
Jax Tax
Senior Tax Attorney
Master's Degree
1,363 satisfied customers
My wife is a Head Start preschool teacher who has gone back
My wife is a Head Start preschool teacher who has gone back to college to get her bachelors degree. She is currently employed directly by a local school district, and that school district operates und… read more
socrateaser
socrateaser
1,031 satisfied customers
I received $3,000 for signing a natural gas well lease. I
I received $3,000 for signing a natural gas well lease. I received a 1098Misc that reported it as other income which is how I claimed the income. I have now been told by the IRS that I need to pay sel… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
As a mutually agreed separation agreement, my former employer
As a mutually agreed separation agreement, my former employer paid me $xx,000 in one payment in 2009. (My final paycheck, which included vacation pay, was received at the end of 2008, and was reported… read more
Anne_C
Anne_C
Attorney
Doctoral Degree
13 satisfied customers
I am helping my daughter with her tax return, she had income
I am helping my daughter with her tax return, she had income on a 1099-misc, for a paid internship. The money received is under nonemployee compensation. how do I characterize this income, as wages, s… read more
jgordosea
jgordosea
Enrolled Agent
Bachelor's Degree
2,885 satisfied customers
In Oct/2008 I received a monetary settlement ($10,000) from
In Oct/2008 I received a monetary settlement ($10,000) from my employer for hostile work environment/age discrimination suit. My tax person said my employer misfiled this amount on 1099 form as "nonem… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
for income tax (fed), how is alimony distinguished from a divorce
for income tax (fed), how is alimony distinguished from a divorce settlement? The divorce settlement directs a portion of retirement income to go to the ex- spouse. Who pays the tax (if any) on the in… read more
Merlo
Merlo
Tax Consultant
558 satisfied customers
A EMPLOYEE/TAXPAYER SUED HIS FORMER EMPLOYER OVER A PAY DISPUTE.
A EMPLOYEE/TAXPAYER SUED HIS FORMER EMPLOYER OVER A PAY DISPUTE. THE FORMER EMPLOYER PAID $10,000 TO SETTLE THE ISSUE. THE $10,000 WAS PAID TO THE ATTORNEY REPRESENTING THE EMPLOYEE/TAXPAYER. THE ATOR… read more
RD
RD
Self Employed
Master's Degree
1,164 satisfied customers
As an attorney, I receive a W-2 from my firm where they ...
As an attorney, I receive a W-2 from my firm where they withhold taxes. I also receive a 1099-MISC with attorney''s proceeds listed; they do not withhold taxes on the 1099 amount. I know this 1099 is … read more
Bill
Bill
Master's Degree
2,278 satisfied customers
Three employees were offered bonuses of $20,000 to ...
Three employees were offered bonuses of $20,000 to purchase stock and become partners. The employees were to be responsible for paying taxes on the bonuses. The employees received the bonuses in 2005,… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x