Well one way of not reporting the income would be to not enter the 1099-MISC at all. The IRS might never follow up on the matter or, if they do, a well-written, well-documented letter might put the matter to rest.
Another approach would be to actually report the 1099-MISC income, allowing the IRS's computers to do their "matching", but then reverse out that income so that your AGI is left unchanged:
- Start the "Miscellaneous Income, 1099-A, 1099-C" interview down at the bottom of the "Your 2017 Income Summary" page.
- Start the "Other reportable income" interview
- On the page "Any Other Taxable Income?" click YES
- On the page "Other Taxable Income" ignore the "Do NOT enter income reported on Form 1099-MISC" warning enter a description and amount, e.g., "1099-MISC issued by [County Name] foster care agency".
- Go back and start the "Miscellaneous Income, 1099-A, 1099-C" interview again, following the same path, and enter a description and a NEGATIVE amount, e.g., "1099-MISC:Section 131(a) exclusion of qualified foster care payments".
That provides visibility to the 1099-MISC but excludes the amount from your AGI and explains the reason why.
Tom Young
