The 1099-MISC allows the company to get the income off their books and show it was paid out. You have two options:
1. Do nothing now. The IRS will receive the form and eventually send you a bill. You can then send a letter showing it was a return of capital. Not recommended.
2. Wait until the finances are settled this year with the IRS and send an amended return showing the income added and subtracted. You will enter the 1099-MISC form and then subtract the income back out like this:
- You would go to personal income,
- scroll to the bottom to misc income,
- start,
- scroll to the bottom again,
- other reportable income,
- start.
- enter negative amount and description.
Don't be too surprised if you get a letter from the IRS in a few years asking about the deduction. Keep the paper trail!
Never send originals to the IRS. They have a great upload tool now so hopefully you can just upload the letter and it will all be simple, if asked at all.
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