Get your taxes done using TurboTax
Your intent is to reverse the IRS form 1099-NEC reported to Other income.
On occasions, Other income may need to be reversed. Post the negative entry as follows:
- Down the left side of the screen, click Federal.
- Down the left side of the screen, click Wages & Income.
- Click to the right of Less Common Income.
- Click to the right of Miscellaneous Income, 1099-A, 1099-C.
- Click to the right of Other reportable income.
- At the screen Other Taxable Income, enter a description such as “Incorrect entry [amount]” and a negative amount.
The entries 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 sure that you keep records of all transactions. Later, you may need to demonstrate to the IRS that this is not taxable income.
This method allows you to report the IRS form 1099-NEC for the benefit of the IRS, yet still report the income correctly on your Federal 1040 income tax return.
The permanent easement portion would be recorded as an adjustment to cost basis for the property.
The temporary easement portion may be reported under the Schedule E rental activity. You may want to select Add income to report the amount of the temporary easement separately.
