Get your taxes done using TurboTax

To report your 1099-Misc and also include an offsetting entry due to a property damage claim, do the following:

1. Go to Wages & Income, select Add more income and scroll down to Other Common Income
2. Click the down arrow and select Form 1099-Misc, click Start or Revisit
3. Enter your 1099-Misc exactly as it appears on the original Form 1099, click Continue
4. In the "Describe the reason for this 1099-Misc", write a description in the box (Remember the description for later)
5. Select "None of these apply" on the next screen and click Continue
6. Answer the additional questions and click Continue

When back at the "What you have so far" screen, click Add more income

1. Scroll down, but this time, go to Less Common Income
2. Click the down arrow to the right of Miscellaneous Income, 1099-A, 1099-C and click Add 
3. Scroll down to the bottom and select Start to the right of Other reportable income
4. Click Yes when you reach, Any other taxable income?
5. Click Add and here you will enter the description you wrote above, along with a negative (-700), Continue

The above steps will report the 1099-Misc, as required, but will also reverse the amount, since it was only to cover damages.