Level 4

Question

Nonqualified deferred compensation

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Client receives a 1099-MISC with Box 14 amount of $14,000 for Nonqualified Deferred Compensation. It is from a previous employer who sold and went out of business (so penalty should not apply, correct?). How/where do I enter this in the tax return? Is there anything else I need to be aware of? I assume SE tax will apply since it was deferred comp. Considering putting it as a 1099-NEC, box 1, transaction. Any insight would be appreciated!

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Level 15

"I assume SE tax will apply since it was deferred comp."

From being an employee and FICA should have previously been withheld on it.

"Considering putting it as a 1099-NEC, box 1, transaction."

But you would not enter a 1099-NEC unless the taxpayer is given a 1099-NEC. You have a 1099-Misc to use, already.

This type of payout should be reported on W2, but perhaps this is payout from a trustee.

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Level 4

As it turns out, client just sent me a Corrected 1099-MISC with all 0's! Looks like somebody caught the mistake. Thank you.