The UAW-FCA-Ford-General Motors Legal Services Plan has issued a 1099-MISC to those who were eligible to use the Plan benefit in 2023.
The 1099 shows that the 2023 taxable value of your legal services fringe benefit is $26.57.
A 1099 is being furnished to all participants by the IRS deadline of January 31, 2024.
Below are some answers to frequently asked questions about the Plan’s 1099-MISC.
Why did I get this 1099?
All Plan participants get a 1099 because the IRS considers the legal services benefit you receive to be a taxable fringe benefit.
I’m an active employee and got a W-2 from my employer. Why did I get a 1099?
The legal services fringe benefit amount wasn’t included on the W-2 you got from your employer because it was decided that the Plan should provide the legal services fringe benefit tax notice to active workers. You aren’t an employee of the Plan, so this amount was reported on a 1099-MISC. See also the footnote in the cover letter you received with your 1099.
Why is the legal services benefit being taxed as income?
Since 1992, the IRS has considered employee legal services benefits to be taxable under the Internal Revenue Code. Before 1992, the cost of legal services to each participant was tax exempt.
Did everyone with the legal services benefit get a 1099?
Yes. Those who were eligible to use the benefit in 2023 are issued a 1099.
I didn’t use the Plan in 2023. Why do I have to pay taxes on a benefit I didn’t use?
You received the 1099 because you were eligible to use the benefit in 2023. We hope you will use this valuable benefit in the future by calling us at (800) 482-7700.
Can I opt out of getting the legal services benefit?
The benefit was negotiated by the UAW and FCA, Ford, and General Motors and was in the 2019-2023 collective bargaining agreement. (The benefit continues to be in the current 2023-2028 collective bargaining agreement.) You can’t opt out of the right to receive your contractual legal services benefit.
What is the 1099 taxable value based on? How was it calculated?
The Plan took the total 2023 cost to provide the legal services benefit to all active and retired members and surviving spouses eligible for the benefit and divided that number by the number of all participants. This resulted in the $26.57 amount.
Will I have to pay the 1099 amount in taxes?
You will not pay the amount on the 1099 in taxes. The amount shown is the taxable value of your legal services benefit in 2023. Depending on the tax rate that applies to your taxable income, you will owe federal income taxes between about $2 and $9 on the taxable amount that applies to you.
How do I deal with this 1099 on my IRS tax form or tax preparation software program?
Specific questions about your tax return should be directed to a tax preparer. However, in general, you should handle the 1099 as follows based on information provided by our tax preparation experts:
- Read your 1099’s full Box 3 instructions. Box 3 is for Other Income.
- IRS Box 3 instructions state that miscellaneous income goes on the “Other income” line of Schedule 1 for those using Form 1040 or Form 1040NR.
- The instructions for Form 1099 NEC Box 1 do not apply.
- You don’t have to file a Schedule C with your tax return because the 1099 reported amount is not self-employment income.
- Some “free” tax software packages charge extra to file a schedule, so check the terms of the program you wish to use.
I’ve been told that because I got a 1099, I need to file a Schedule C with my tax return. Is that true?
No. The amount on your 1099 is the taxable value of your legal services benefit in 2023, not self-employment income.
How did you get my home address?
The Plan got your home address from the Plan sponsors: FCA, Ford, General Motors, UAW.
Does the IRS know about the income reported on my 1099?
As required, we have sent the IRS a copy of each 1099.
Should I send the Plan the amount that I owe?
No, don’t send the Plan any money. The 1099 Box 3 instructions state that you should report the amount on your 1099 on IRS Form 1040, Schedule 1. For more information, see the question above: “How do I deal with this 1099 on my IRS tax form or tax preparation software program?”
Will I get another 1099 in 2025?
All Plan participants will get a 1099 for each tax year they are eligible to use the Plan benefit.
My spouse and I each work for a Plan sponsor and each of us got a 1099 from the Plan. Is that right?
As individual employees of a Plan sponsor, you and your spouse each have your own 1099, just as you each have your own W-2.
I’m out of state for the winter and need another copy of the 1099 sent to me. What do I do?
Write to clientcomments@uawlsp.com or call us at (800) 482-7700 and tell the intake employee what you need. Arrangements will be made with you to mail or email you a copy of your 1099. We’re open Monday through Friday from 9 a.m. to 5 p.m. (ET).
I received a 1099 that doesn’t have my full name/has a partial-incorrect name/has a partial- incorrect address. What do I need to do?
The Plan gets your name and address from the Plan sponsors, so you will need to contact the sponsor involved and provide the correct information. After you provide the correct information, a corrected 1099 will be sent to you.
- Active employees will need to contact your employer’s office that handles name and address changes.
- Retirees and surviving spouses should call the applicable employer number: FCA (888-409-3300), Ford (800-248-4444), General Motors (800-489-4646); International Union, UAW (313-926-5000).
I received more than one 1099. Is that right?
Generally, you should get only one 1099. Your name may be listed more than once in the list provided to us. If you have this issue, please call us at (800) 482-7700. We will ask you for your name, full address, and last four digits of your Social Security number. We will also need to know where you work (if you’re an active employee), where you retired from (if you’re a retired employee) or where your deceased spouse worked or retired from (if you’re a surviving spouse). We will investigate, and someone will follow up with you.
You will file only one 1099 with your tax return. We will let the IRS know that the duplicate 1099 that you received was sent in error and has been voided. You should keep both 1099s and all 1099-related notifications you receive from the Plan for your records.
I have more questions. What do I need to do?
Write to clientcomments@uawlsp.com or call us at (800) 482-7700. We are open Monday through Friday from 9 a.m. to 5 p.m. (ET). We will do our best to assist you.