After you file

The IRS would presume that the payment was taxable income since it is reported on the IRS form 1099-MISC.

Self-employment income requires that you carry on a trade or business and implies an attempt to make money.

If this is not self-employment income, the income could be reported as other income on line 8 of the Federal 1040.

Follow these steps.

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Scroll down to Less Common Income and click on the dropdown menu.
• To the right of Miscellaneous Income, 1099-A, 1099-C, click the Start / Revisit button.
• To the right of Other reportable income, click the Start / Revisit button.
• At the screen Any Other Taxable Income, click Yes.
• At the screen Other Taxable Income, enter a description such as “Medical reimbursement” and the 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.

@Opus17 discusses that the payment should not be taxed at all.  In that case:

• At the screen Other Miscellaneous Income Summary, click Add another Miscellaneous Income item.
• At the screen Other Taxable Income, enter a description such as “Medical reimbursement nontaxable” and a negative amount.
• Click Continue.

Make sure that you keep records of all transactions.  Later, you may need to demonstrate to the IRS that this is not taxable income.

@anniedau [Edited 02/15/24 | 8:07 pm PST]