Question

Error: "Form 1099-misc: a link to schedule c should not be linked when the mwp qualifying as difficulty of care payments exclusion box has been checked"

Forum|Forum|3 years ago
February 23, 2023
4 replies
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In my final review before filing, I received the following error: "Form 1099-misc: a link to schedule c should not be linked when the mwp qualifying as difficulty of care payments exclusion box has been checked." I have two 1099-MISC's: one for self-employment, and one for a non-taxable state rebate. This error is for my self-employment. This error did not occur until the TurboTax update loaded this morning. There is not a checked box that I can find.

S

ssbart

I have this same issue

DawnC

You should delete the 1099-MISC from your Schedule C - in the Business section of TurboTax. Then go back and re-enter it in the Personal section. It was either entered in the Business section or somehow got linked to your Schedule C, but there is no button to ''unlink'' it, so deleting it from Sched C and then entering it in the Personal section is the way to fix that error.

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M

moneypitranchAuthor

I removed the 1099-MISC from business and reentered it in personal, along with the 1099-MISC for the CA Middle Class Tax Relief and I still get the error. When I reentered the 1099-MISC it asked me if there was schedule C, which there is - shouldn't I connect these two?

DawnC

The Middle-Class Refund should not be attached to your business.
If you are excluding (from income) the amount on the 1099-MISC as difficulty of care payments (Qualified Medicaid Waiver Payments) - then enter it in the personal section and do not link it to your Schedule C (select these are medicare waiver payments).
If you want to include the payments in taxable business income, then do not enter the form in the personal section and select these are Medicaid Waiver Payments - you should enter it in the Business section, with your business income, and do not indicate they are waiver payments.

Anything you mark as MWP will not link to Schedule C. So, do you want to include the MWP in income or do you want to exclude the MWP from income?

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M

moneypitranchAuthor

thank you very much! I'll do that now.

M

michellehomebiz

This error of "MWP qualifying as difficulty of care payments exclusion box has been selected."
is due to the IRS 8960 update/error.

Issue is with TurboTax desktop allowing 1099 MISC to be entered into Schedule C as income.

Even though there is a box to select and users are allowed to enter their 1099 MISC inside the Business, the Employer should have actually issued a 1099 NEC, if the taxpayer is wanting to enter this into a Schedule C.

SOLUTION / Work around:

Go to Schedule C, income, update. Remove 1099 MISC.

Go to General business Income, just below that, and click start.

Enter this income in box as 1099misc and the amount.

This allocates the income properly to the Schedule C and reports that it's a 1099 misc for the business.