Since the reimbursement was reported on Form
1099-MISC and the IRS has a copy of that form, they will expect to see it reported on your tax return. That does not mean that it should be included
as taxable income though, especially since you have all of the receipts and
documentation to provide (if asked) that show it was a reimbursement and not
income to you.
Reporting this in TurboTax will be a two-step
process, first to include the 1099-MISC as income and then to make a negative
adjustment to remove it.
To include the 1099-MISC as a part of your tax
return, follow these steps:
On the top row of the
TurboTax online screen, click on Search (or for CD/downloaded TurboTax
locate the search box in the upper right corner)
This opens a box where you can
type in “1099-MISC” (be sure to enter exactly as shown here) and click
the magnifying glass (or for CD/downloaded TurboTax, click Find)
The search results will
give you an option to “Jump to 1099-MISC"
Click on the blue “Jump
to 1099-MISC” link
Answer Yes you did receive a 1099-MISC
Fill in the details from
your 1099-MISC then click Continue
Provide a short description
for the reason you received the 1099-MISC then click Continue
On the next screen titled,
“Does one of these uncommon situation
apply?” choose the last option, None
of these apply and then click Continue
On the next screen asking
if the 1099 involved work like your main job, answer No and click Continue
On the next screen, check
the box that you received the income in
2015 and then click Continue
Finally, choose “No, it didn’t involve an intent to earn
money” and click Continue
Answer the questions on the
next couple of screens to finish the process
Now the income shown on the Form 1099-MISC has been added to your
return. Next, it will be “removed” from
the return.
Follow these steps:
Go to Federal Taxes > Wages & Income and scroll to the bottom of
the screen to the Less Common Income section
(expand the section by clicking Show
More if necessary)
Click Start or Update beside Miscellaneous Income, 1099-A, 1099-C
Scroll to the bottom of the
list and click Start or Update beside Other Reportable income
Answer Yes to move forward
Enter a brief description,
such as “reimbursement adjustment,” and the amount reported on the 1099-MISC as
a negative
number then click Continue
Click Done
When you see your Form 1040, the amount shown on the Form
1099-MISC will be reported twice on line 21 – once as a positive amount and
once as a negative amount.
