Got 1099-MISC with Box 1 Rental from employer for Car Allowance how do I enter and deduct my related expenses since this is taxed income I did not expect?

[goeasy80457]

This is my first year and I am not sure how to address it I received a 1099-MISC and the amount is shown under Box 1 where should I enter this I have conflicting information because it is reflected as rent then should it be entered as rental income and then deduct my car expenses from that.  Just need to clarify as it is paying a $700 swing in my taxes.

[DianeW]

Your employer is doing it wrong. A car allowance should be added to box 1 of your W2 as taxable income. Ideally your employer issues you a corrected W2 and a corrected 1099-MISC showing $0.

Assuming that's not going to happen, enter the 1099-MISC, in TurboTax. When asked why you got this, answer "nonbusiness income from the rental of personal property". You cannot deduct your mileage directly from the income. You are allowed to deduct your mileage (53.5 cents per mile for 2017) and other job expenses. TurboTax completes form  2106, which  then carries to Miscellaneous itemized deductions on Schedule A. The problem with this is that you only get to deduct that portion of  your expenses that exceed 2% of your AGI; and then only if your total  itemized deductions exceed the standard deduction.  Since your reimbursement is in after tax money, reported on your W-2 or 1099-MISC, the reimbursement does not have to be entered in TurboTax and shown on form 2106.

To record your mileage for your job related car expenses in TurboTax:

1. Federal Tab (Personal for H&B version)
2. Deductions & Credits
3. I'll choose what I work on
4. Scroll down to: Employment Expenses > Job related expenses

This is the correct way to enter this income and the applicable job related deduction.