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Level 2

double taxed!! Help!

I was paid by a legal firm to do a lawsuit review, but my current employer required me to give them (my employer) the money, then they paid me (minus taxes) in my next paycheck.  So I have a 1099-MISC for $2800, and TurboTax is calculating that I owe tax on that, but I wrote a check to my work for $2800 and they withheld taxes and I got a net of about $1600.  So how do I avoid paying double tax on TurboTax??



1 Comment
Employee Tax Expert

double taxed!! Help!

Well you need to report the 1099-MISC as it is reported because the IRS also receives a copy.


Enter in TurboTax in two steps:


First, enter the 1099-MISC for the $2800 in the Less Common Income section, Miscellaneous income, Other Reportable Income. Enter a description along the lines of 'lawsuit review' and the amount.


Second, repeat the steps but for the amount, enter as a negative number and a description like 'lawsuit review amounts included in W-2 income'. In effect, you have cancelled the income amount. The two entries will show on line 21 of your 1040, but a taxable amount of zero.


Keep the 1099-MISC forms and other documentation that you have regarding the payment to your employer for your records should you need to explain.