How do I enter something on Schedule I, Line 24z?

[ANGRY JANE]

As a long time user of Turbo Tax, I am completely frustrated.  I have a perfectly legal reason to adjust my income downward as a graduate student (our University pay is handled oddly).  The IRS provided Schedule 1, Line 24z, to report this adjustment, and Turbo Tax prevents usage of this line.  Guess it's time to find a new tax program.  

[asinghalmd]

has anyone been able to use TT Home/Business to enter a comment and value on Schedule 1, line 24z? I'm entering my taxable Govt grant (1099-g) but it shows as personal income. I'm going to manually enter it in Schedule C (business) so I don't want to be double taxed

[Critter-3]

DO NOT enter the income twice ... only enter it in the Sch C income section.  

[John-S II]

This issue is also a problem for CA residents who received a 1099-MISC from the State of California for the inflation relief payment in 2022 - called the Middle Class Tax Tax Refund.  CA FTB said the refund is not subject to CA tax but issued a 1099-MISC anyway because they said they weren't sure whether it was subject to federal taxes.  So now taxpayers must report that 1099-MISC as income, but those of us who believe that the payment is not subject to federal tax because of IRC section 139 (disaster payments) have nowhere in TurboTax to put the adjustment. 

[Critter-3]

Assuming your question is about the CA Middle Class Tax Refund (MCTR) you are correct the amount is non-taxable.  You probably received a form 1099-Misc which is how you enter the amount.  The latest update in TurboTax should correctly handle the MCTR payment. 

1. Go back to the "Wages and Income" section.
2. "Edit" the 1099-Misc
3. "Delete" the form entry
4. Click "Done"
5. On the summary page scroll down to "Other Common Income" 
6. "Revisit" the 1099-Misc topic
7. Re-enter the form information
8. You will arrive at a page titled "Does one of these uncommon situations apply?"
9. Click the button "This was a California Middle Class Tax Refund (MCTR)
10. Finish the interview section.

This will automatically exclude this amount from federal income. On the federal tax return, the MCTR payment will reflect as a positive amount, as well as a separate negative amount.  

Both the positive and negative amounts will show on line 8z on the Schedule 1.  You can see these entries in the forms view for desktop versions or in the online versions by following these steps:

1. "Tax Tools" in the left hand menu
2. "Tools"
3. "View Tax Summary" in the main screen
4. "Preview my 1040" in the left hand menu

The income will no longer be in the Federal Adjusted Gross Income amount and therefore will not transfer to the CA tax return either.

[ssdc]

The IRS definitely does indicate that we should put an entry on Schedule 1, line 24z. This is for the 1099-K paypal for personal property sales that everyone is talking about. 

Here is the guidance from the IRS page on 1099-K's (from https://www.irs.gov/businesses/understanding-your-form-1099-k)

Scenario: Personal items sold at a loss

Action(s) to take:
If you receive a Form 1099-K for a personal item sold at a loss, report the information on Form 1040, Schedule 1, Additional Income and Adjustments to Income with offsetting transactions. For example, if you receive a Form 1099-K for selling your couch online for $700 you will report:

Part I – Line 8z – Other Income – Form 1099-K Personal Item Sold at a Loss $700
Part II – Line 24z – Other Adjustments - Form 1099-K Personal Item Sold at a Loss $700
The net effect of these two adjustments on adjusted gross income would be $0.

[Anonymous_]

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@ssdc wrote:

There is actually very clear guidance about using Schedule 1 line 24z to report 1099-K information. Specifically, for personal items sold at a loss.

I echo everyone else that it is very frustrating TurboTax/Intuit did not make a plan for the 1099-K's that were getting issued this year. I hope they fix it for next year.

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I agree; they are treating this scenario as the sale of some sort of asset in the program so that the transaction winds up on Form 8949 instead of being offset on Line 24z of Schedule 1. Note that entering a description and figure on Line 24z requires an override and the use of Forms Mode for this purpose.

The screenshots below are indicative of how the scenario is being handled in TurboTax.

[GeorgeM777]

To report your 1099-Misc, select Wages & Income, then scroll down the screen to 1099-Misc and Other Common Income and select the option for Income from Form 1099-MISC.  Enter your information.  

On the screen Describe the reason for this 1099-Misc is where you will enter information describing your 1099-Misc as a CA MCTR. Selecting What if I got my 1099-Misc for something other than a job will produce the following response:

What if I got my 1099-MISC for something other than a job?

You might have gotten your 1099-MISC for prize money, a lawsuit settlement or another reason that wasn't work-related. In that case, simply type in the reason (like "prize money" or "lawsuit settlement").

If the reason for the 1099-MISC was California's Middle Class Tax Refund, type in "CA MCTR" as the description.

After entering CA MCTR in the description, you will see a screen where you can select This was a California Middle Class Tax Refund (MCTR).

@John-S II

[ssdc]

Can anyone escalate this to Intuit to try to get the ability to add an entry to Schedule 1 line 24z (which then carries through to Form 1040 line 10) for this filing season? Or are we just going to be out of luck?

[Anonymous_]

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@ssdc wrote:

Can anyone escalate this to Intuit to try to get the ability to add an entry to Schedule 1 line 24z (which then carries through to Form 1040 line 10) for this filing season?

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We are doing our best, I can promise you that.

[TeresaM]

If you have received a Form 1099-K which has amounts that are not income and not self-employment, you should enter the Form 1099-K as it is received, in the Other Common Income section, so that it matches what was reported to the IRS.  
 

In addition, make an adjustment to show the negative amount which should be subtracted. 
For instance:
1099-K personal transactions  $ -100
1099-K sale of personal items at loss   $ -200

To enter this, go to:
 

1. Wages and Income
2. Scroll down to Less Common Income and select  Show More
3. Scroll down to the last entry and select Start or Review for Miscellaneous Income, 1099-A, 1099-C 
4. Scroll to the last entry, Other reportable income and click on Start
5. Any Other Taxable Income? Select Yes
6. Then enter 1099-K, the reason for the adjustment, and the amount, as below, and Continue
    

This adjustment entry will appear on the return on Form 1040, Schedule 1  Part II – Line 8z, Other Adjustments, which follows the directions from the IRS on their website.  See Question 8 for an example.

It should show like this on your Schedule 1

[Edited 02/02/23|711:39 am PST]
@ssdc

[ssdc]

@TeresaM  Thanks for the help trying to figure this out. 

I will give this a try and report back. 

[ssdc]

I followed the guidance from @TeresaM above, and get the results below, depending on how the 1099-K is categorized. Again, this is for personal property "garage sale" style eBay sales, which should be governed by the "Personal items sold at a loss" instructions here: https://www.irs.gov/businesses/understanding-your-form-1099-k

(Note: I'm using TT Premier Online)

1) If I say the 1099-K is for "Personal Item Sales", then it takes me down the rabbit hole of 1099-B's and treating this as an investment sale, which it's not. This ends up misstating overall income because the adjustment is improper in this case to carry on Schedule 1, as the 1099-B path results in no taxable income. So this seems like the wrong way to go for sure.

2) If I say the 1099-K is for "Hobby Sales," then the 1099-K income appears on Schedule 1, Line 8j "Activity not engaged in for profit income", and the negative adjustment shows up on Schedule 1, Line 8z.  (It does *not* show up on Schedule 1, line 24z as would be proper). Because both the income and adjustment amounts are in Part 1 of Schedule 1, it nets out to a 0 being reported on Form 1040 Line 8. This procedure does *not* result in proper listing of an income item on 1040 Line 8 and an offsetting adjustment amount on 1040 Line 10. It is nice that the income and adjustment are explicitly listed on the Schedule 1 this way, albeit in the wrong spots. However, I'm hesitant to have the income appear on 8j and not sure of the implications - and I am also hesitant to characterize the income as hobby sales, which it isn't. 

3) If I say the 1099-K is for "Other (can include any taxable income not reported elsewhere on your return)", then I end up with a net 0 reported on Schedule 1, Line 8z with a "See statement" message. Again, this procedure does *not* result in proper listing of an income item on 1040 Line 8 and an offsetting adjustment amount on 1040 Line 10. The statement reads:

Other Income from Form 1099-K: 1,668.

Form 1099-K Personal Item Sold at a Loss: -1,668.

So with all of the above scenarios, we still don't end up with what the IRS recommends doing for this situation.

I'm not sure which of options #2 or #3 above would be the "least worst". Anyone have thoughts? 

[Anonymous_]

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@ssdc wrote:

Anyone have thoughts? (We still don't end up with what the IRS recommends doing for this situation, in any of the cases.)

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That would be because Intuit has not implemented Line 24z of Schedule 1 for any purpose at this time; it simply does not work, currently.

[AbrahamT]

Go into Less Common Income, Misc Income, Lets work on Misc income,, Did you receive Other Wages-answer Yes till you get to the screen Any Other Income, hit yes, then source of Other Income, Other, then in description enter duplicate income and put a negative 60,000 like this

 See if this works for you. Of course, first enter the 1099K income as you would normally do first.