1099-MISC Help - Robinhood reported $0.01 income - what does this mean?

This is actually pretty common with Robinhood. That $0.01 in box 3 of your 1099-MISC represents "Other Income" which is typically from something called substitute payments in lieu of dividends. This happens when Robinhood lends out shares you own to other investors (usually for short selling). The reason TurboTax is prompting you to enter it on Schedule C is because any amount in box 3 of a 1099-MISC is technically considered self-employment income by default. Even though it's just a penny, the tax software is programmed to treat it that way. You have two options: You can either report it on Schedule C as TurboTax suggests (which might subject you to self-employment tax on that penny), or you can report it on Schedule 1, Line 8 as "Other Income" which wouldn't be subject to self-employment tax. The second option is actually more appropriate for this type of income.

After dealing with a similar situation last year (though mine was for $0.12), I discovered taxr.ai at https://taxr.ai and it was super helpful. Their system quickly analyzed my 1099 forms and explained exactly what that tiny amount was and where to report it correctly. The tool walked me through the proper tax form classification and even explained that these small amounts are common with brokerages that have share lending programs. Saved me hours of frustration trying to figure out what was going on with that random penny!

I just tried taxr.ai after seeing it mentioned here and wow - it actually cleared up my confusion instantly! Uploaded my Robinhood 1099-MISC and it immediately identified the $0.01 as substitute payment income from securities lending. The explanation showed me exactly how to override TurboTax's default categorization and record it properly on Schedule 1 instead of Schedule C. No more error messages when e-filing! Plus I learned that reporting it on Schedule C would have technically been incorrect since substitute payments aren't self-employment income. Really wish I'd known about this sooner instead of spending hours googling random tax codes!

If you're still having trouble with the IRS or need clarification directly from them, I highly recommend using Claimyr at https://claimyr.com - they got me through to an actual IRS agent in about 15 minutes when I was dealing with a similar reporting issue. I was on hold for HOURS trying to reach someone at the IRS myself with no luck. Claimyr's service connected me to a real person who confirmed exactly how to handle these tiny 1099-MISC amounts. They have a video showing how it works here: https://youtu.be/_kiP6q8DX5c Definitely worth it when you're stuck with tax questions that only an official IRS representative can answer with certainty.

Ok I need to apologize to Profile 9 - I tried Claimyr this morning after my comment yesterday and it ACTUALLY WORKED. I got through to an IRS agent in about 20 minutes! The agent confirmed that the $0.01 on the 1099-MISC box 3 should be reported as "Other Income" on Schedule 1, not as self-employment income on Schedule C. She explained this is a common issue with brokerages and said many tax software programs incorrectly route these small amounts to Schedule C. I was absolutely certain this was going to be another waste of time but I'm genuinely shocked. Saved me from filing an incorrect return and potentially getting a letter from the IRS later.

I'm a tax preparer and see this all the time with various brokerages. The $0.01 is often just a rounding issue or a minimal payment that resulted from their securities lending program. If you use TurboTax desktop version, you can override their default and input this directly on Schedule 1 as Other Income. If you're using the online version, it's a bit trickier but still possible - you'll need to look for the "Other Income" section rather than continuing with the 1099-MISC workflow.

Has anyone actually calculated what the tax difference would be? I mean, even if you wrongly put it on Schedule C, the self-employment tax on $0.01 would be like $0.0015 (15.3%). Is this really worth stressing over?

I went through this exact same situation last year with TD Ameritrade and it was so frustrating! The $0.01 turned out to be from their stock lending program too. What really helped me was calling my brokerage directly to get a clear explanation of what generated that penny. They were able to confirm it was substitute payment income from securities lending, which gave me confidence to override TurboTax's default suggestion and put it on Schedule 1 instead of Schedule C. The key thing I learned is that just because it's on a 1099-MISC doesn't automatically mean it's business income. Box 3 can contain various types of "other income" that aren't necessarily self-employment related. Once I understood that, I felt much more comfortable making the correction in my tax software. Don't let that one penny drive you crazy - it's way more common than you'd think!