Has the IRS form 1099-MISC income been reported to Other Income on the IRS form 1040 income tax return?
Or reported on the LLC 1065? If the income is reported on the IRS form 1065, could not a miscellaneous expense reverse out the incorrect income?
In TurboTax Desktop H & B, post the negative entry as follows:
- Across the top of the screen, select Personal.
- Across the top of the screen, select Personal Income.
- Select I'll choose what I work on.
- Scroll down to Less Common Income.
- To the right of Miscellaneous Income, 1099-A, 1099-C, click the Start/Update button.
- To the right of Other reportable income, click the Start/Update button.
- At the screen Other Taxable Income, enter a description such as “Income in error” and a negative amount.
- Click Continue.
The entry will be reported:
- on line 8z of Schedule 1 of the Federal 1040 tax return, and
- on line 8 of the Federal 1040 tax return.
Make the description as explanatory as space will allow. If you electronically file, there is not an ability to enclose a letter.
If you file by US Mail, you may enclose a letter of explanation.
In any case, make sure that you keep records of all transactions. Later, you may need to demonstrate to the IRS that this is not taxable income.
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