You are correct. There
are times that you may receive a Form 1099-MISC reporting the rental income
that should not be included as taxable income.
This creates a problem with your tax return because the IRS will also
receive a copy of the form and they expect it to be reported somewhere on your
return as income. They do not know that
you received it for a rental period that is within the exception time
period. As a result, unless it is included
on your tax return you may receive a letter from the IRS stating you did not
report all of your income.
So, you need to report the income and then subtract it
out.
To do this within TurboTax and also give some descriptive
words about the income and income adjustment, use these steps:
Go to Federal
Taxes > Wages & Income. Scroll
through the categories of income to the last section which is Less Common Income.
Within the Less
Common Income section, find the last item on the list which is Miscellaneous Income, 1099-A, 1099-C. Click Start
or Update beside this line.
This will open another list of income
items. Find the last item on the list
which is Other reportable income. Click Start
or Update beside this line.
Here you will enter a description for the income
item and the income amount (ignore the statement about not entering amounts
from a 1099 on this screen). Use a
description such as “1099 for rent less
than 15 days” and enter the income amount.
Click Continue.
Next, click the blue link to Add Another Income Item.
This time enter a description such as “adjustment for rent less than 15 days”
and enter the income amount again, only as a negative number. Click Continue.
This will report both the income and the
adjustment on line 21 of your Form 1040 with the descriptions included for each
amount.
