Hello. We received a 1099-MISC from the county for 50% of the cost we paid for a new septic system which qualified for their Watershed Restoration grant funding. We paid for the septic system in full with our post tax money and they reimbursed us 50% after receiving proof of payment and photos. When entering the 1099-MISC information in Turbotax and answering the questions as 'none apply' and 'no' it is not similar regular line of work, it is still increasing my taxable income. Since the amount being reimbursed was originally paid with post tax dollars, shouldn't this amount be exempt tax? Was the county correct in sending me the 1099-misc?
Thank you for any clarification and help.
