To avoid issues with the IRS, you need to include Form 1099-NEC on your return. In this case, you can report the income then enter a negative adjustment to Other Income to cancel it out.
Enter the form 1099-NEC in the Income and Expenses section of TurboTax, then Other Common Income, then Income from form 1099-NEC. Mark this as sporadic income (not related to a business).
Follow these instructions to enter the adjustment:
- Go to the Income and Expenses section of TurboTax.
- Choose Less Common Income.
- Choose Miscellaneous Income, 1099-A, 1099-C.
- Choose Other reportable Income.
- Enter a description and the amount (as a negative number) of your excluded income.
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