The answer given by TomD8 didn't work for me. Turbo Tax is saying I owe Self Employment tax on the MN rebate, but I should not have to pay Self Employment Tax on this income. I'm required to report it on my federal return, otherwise I can't deduct it on my state return. I tried including the $520 state rebate as income from a state tax refund. That isn't right, because when Turbo Tax checks my state tax return, it says I can't deduct the $520 on my state tax return unless I report the income from Form 1099 MISC. I'm in a catch 22! I don't want to pay SE tax on the rebate, but how do I report it as income on Schedule C without paying SE tax on the federal return? Thank you for any help you can provide.
