Where do you put the 1099-MISC generated by Single owner S Corp for Home Rental to Personal Tax Return 1040?

[yekasi]

Hello.

I have a single owner SCorp which I generated a K-1 to myself and a 1099-MISC to myself for 14 days of Rental of primary own residence.  The S Corp tax return was filed in March.  

I am working with Turbotax personal tax and I entered in the 1099-MISC info and the K-1 Info.  The 1099-MISC is $5600 and the K-1 is $72021.

But it looks like they added the amount of 77621 as "Other Income from Schedule1, Line 10" onto my personal 1040 line 8. Schedule 1 shows $5600 in line 8k, and $72021 in line 5, making it a total of $77621 in line 10.

I thought the $5600 was suppose to be non-taxable, so i think I must have missed it somewhere to flag it as a non-taxable income.

Do I simply not enter this 1099-MISC to my personal tax return? Or there is a place where I should flag it as non-taxable ? Or I need to enter adjustment somewhere?

How do i handle this please?

Thanks

[KrisD15]

First, enter the 1099-MISC 

If the amount is listed as rent, the program will insist in a schedule E. 

You could move the amount to Box 3 to get it through the program

Next, go to Less Common Income section, Miscellaneous income, Other Reportable Income. 

Use "14-day rental rule" as the description and enter as a negative number. 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.

Be aware that this could raise a red flag and that the IRS may frown upon this. The IRS could even disallow it. 

Going forward, you might consider setting up an expense accountable plan. 

The S-Corp could reimburse you as an employee for a home office as well as other expenses if applicable. The reimbursements would be expenses to the business but tax-free to the employee and the IRS would be satisfied. 

Accountable Plan Info

[yekasi]

Hello. thanks.

1) I do not need an entry in schedule E for this - am i right?

2) And you mean that I can enter the value into box3 even tho it is box2?

thanks

[DianeW777]

Yes, based on the information provided, this was actually a reimbursement from your company.  When you move it to box 3, be sure to answer as indicated below.

It's important for you to select 'None of these apply" and then you should also select the following:

1. Other Common Income > Form 1099-MISC
2. 'No' on the screen 'Did the '____' involve work that's like your main job?'
3. 'No' on the screen 'Did the '____'  involve an intent to earn money?' 

This will report the income without any business activity and it will show up on Form 1040, Line 8 (From Schedule 1, Line 8z).

Next follow the instructions provided by our awesome Tax Expert @KrisD15.  Likewise it's important to handle this differently through the business in the future using the 'accountable plan' rules.  Keep all your documentation and notes with your tax file should you need it later.

[yekasi]

But my box3 on the 1099-MISC was empty.  The actual $5600 is on Box1.  That is considered okay by moving it to Box3 - and not causing "error"?  Or did I do it wrong causing it in Box1 instead of Box3 when i created this 1099-MISC from the S Corp back in March?

[DianeW777]

The purpose in putting it in box 3 is to eliminate rental income since you recognize this as a reimbursement. If you prefer, you can enter it as rent (box 1) then enter your '14-day rental rule' under 'Other Expenses' on the Schedule E instead of 'Less Common Income'.

Either way will accomplish the same end result if these are the only two entries. 

Please update here if you have more questions.