KrisD15
Expert Alumni

Retirement tax questions

Form 1099-INT should be reporting the interest on the money they took. That would need to be entered and claimed.

  • Wages & Income 
  • Interest and Dividends
  • Interest on 1099-INT    START 

 

As far as the 1099-MISC that you say is reporting the return of your personal funds, that gets tricky. 

The loss of that money could not have been claimed by you since the law on claiming personal losses changed in 2018. Personal loss is not claimed for tax years 2028 through 2025.

 

The 1099-MISC sounds like a "Reimbursement" and the only reimbursements the IRS addresses are "Employee Reimbursements", "Medical" and "Insurance".

 

How to handle the 1099-MISC is somewhat up to you at this point. 

 

First, the most conservative way would be to enter the 1099-MISC as Other Income, subject to income tax, not Self-Employment tax.

 

Second, you can just not enter the 1099-MISC and have the documentation to show it was simply a return of your funds. The IRS very well may inquire and you would need to make your case. This could also flag your return if the IRS system is looking for you to match that 1099-MISC

 

The third way would be to enter the 1099-MISC and then make an adjusting entry to zero that income out. You could include a description something like "Wells Fargo's return of funds" to clue the IRS as to the reason for that entry. This way the 1099-MISC is matched in the system, but you're not taxed on the income. 

To go this route:

  • Enter the 1099-MISC under
  • Wages & Income
  • 1099-MISC and Other Common Income
  • Income from Form 1099-MISC    START
  •  
  • Once that entry is done, go to:
  • Wages & Income
  • Less Common Income
  • Miscellaneous Income, 1099-A, 1099-C    
  • Other reportable income    START

 

Type "  "Wells Fargo's return of funds" or something similar for the Description 

Enter that amount AS A NEGATIVE NUMBER  (put a minus sign in front (-) 

The reversing entry will post on Schedule 1 line 24z

 

I'm surprised Wells Fargo issued Form 1099-MISC rather than just a check, but I believe those are your three options. 

 

There are no links for me to provide since this is a specific issue not addresses specifically in any IRS publications that I can find. 

 

 

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