If the full amount of the payments is showing as taxable on your return after you enter you form 1099-MISC, and you determine that they shoud not be, you will need to enter a negative adjustment to income to make the reported income correct as follows:
- Choose the Federal option on your left menu bar
- Choose Wages & Income
- Find Less Common Income in the list of income sources
- Use the Show More option to expand the choices and choose Miscellaneous Income, 1099-A, 1099-C
- Choose the Other Reportable Income option and find Other Taxable Income in that section
- Enter a description for your adjustment and the amount as a negative number
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