It depends. Since it was reported to you on Form 1099-MISC, it must be included in income and there are no offsetting expenses allowed due to the Tax Cuts and Jobs Act.
- If the employer paid you through an accountable plan (see page 29 of IRS Publication 463), only what was already included in your W-2 would have been reportable.
- The reimbursing income you received would be offset by the expenses you incurred.
When income is received on Form 1099-MISC from an employer, it should have been included in wages. It cannot be offset by expenses.
To report it, you have two options.
- Option 1: To declare this income as Other Common Income from Form 1099-MISC:
- From the left menu, select Federal
- Wages & Income, Scroll down to Other Common Income
- Click Start by 1099-MISC
- On the Does one of these uncommon situations apply? Select Taxpayer's employer reported this extra money on a 1099-MISC but it should have been reported on a W-2 and continue through the rest of the entry.
- Option 2: To declare this income, as Less Common Income:
- From the left menu, select Federal>
- Wages & Income>
- At the bottom of the income already reported, click Add more income or scroll down
- Less Common Income click Show More>
- Miscellaneous Income, 1099-A, 1099-C click Start>
- Other income not already reported on a Form W-2 or Form 1099 click Start
- Click Yes>Continue>Continue>Yes>Employee compensation that was not reported on a W-2 click Continue
- You will need to identify your employer, their EIN (found on your W-2), and your annual wages. And identify other expenses reimbursed by the employer. Then, click done. TurboTax will handle the rest.
