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Should I report severance pay for a rescinded job offer using the 1099-NEC form I was provided, or file a replacement W2?

Forum|Forum|3 years ago
March 11, 2023
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I had a job offer at a company, but then they rescinded the offer a week before I started (so I never actually worked there). Since the offer was rescinded, they payed me the equivalent of a month's salary as severance pay. They provided a 1099-NEC form to me to report this severance pay (presumably because I was never actually employed there), but the questions TurboTax is asking don't make sense for the situation (like asking me to describe what my self-employed business is). Should I file a replacement W2 instead?

TurboTax Deluxe Online

Best answer by DMarkM1

No, you will not include this as W2 income. You should start the form entry anew by first deleting it. Make sure you have deleted it from the "Self-employment" topic and the "Other Common Income" topic. You can also use the "Delete a form" function in desktop versions in the forms mode or in online versions using these steps.

1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "Delete a Form"
4. Find the 1099-NEC
5. "Delete"
6. "Confirm Deletion"

After that Revisit the "Other Common Income" topic and use the "1099-NEC" topic.
Answer "Yes" and "Add a 1099-NEC"
Fill in the ID information and box 1 amount
Continue
Describe as "Severance Pay"
Select the category "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common)."
Continue and Done

DMarkM1Answer

No, you will not include this as W2 income. You should start the form entry anew by first deleting it. Make sure you have deleted it from the "Self-employment" topic and the "Other Common Income" topic. You can also use the "Delete a form" function in desktop versions in the forms mode or in online versions using these steps.

1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "Delete a Form"
4. Find the 1099-NEC
5. "Delete"
6. "Confirm Deletion"

After that Revisit the "Other Common Income" topic and use the "1099-NEC" topic.
Answer "Yes" and "Add a 1099-NEC"
Fill in the ID information and box 1 amount
Continue
Describe as "Severance Pay"
Select the category "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common)."
Continue and Done