Treat this "sa if" you received two physically separate 1099-MISC forms. One with an amount in box 1, and another with an amount in box 7.
Depending on your rental contract with the payer (the payer is not necessarily the tenant either, so you may have a separate contract for that) you treat the box 7 amount *as if* they paid the last month's rent up front.
Now you already know how to enter the box 1 1099-MISC. Use the below guidance to enter the box 7 1099-MISC so that it is ***NOT*** treated as business income and generates a SCH C thus wasting your time and adding to your confusion in future years.
When the tenant vacates and gets their deposit back, you just subtract what you give back from the total rental income received for that year, and you're good.
Reporting 1099-MISC (box 3 or box 7) that is not self-employment income
Under the Wages & Income tab (or Personal Income tab) scroll down to Other Common Income and elect to start/update Income from form 1099-MISC. Then click YES to indicate you have a 1099-MISC.
Enter the 1099-MISC exactly as printed, and then Continue.
Enter the reason you got this money – be it scholarship, bonus, streaking butt naked across the 50 yard line of the super bowl, whatever. Then continue.
Select None of these apply, then Continue.
Select No, it didn’t involve work….. and Continue.
Select ONLY the tax year for which this specific 1099-MISC was issued. Do not select the year that you received the 1099. Select the year for which the 1099-MISC was issued. Select no other year. Then Continue.
Select No, it didn’t involve an intent to earn money, then Continue.
Select NO, then Continue.
Click the DONE button, and that does it.
