Won cruise - did not accept prize - still got 1099

[Taxguy100]

Won $2000 cruise on NBC TV show. Received a 1099-Misc. However, I told them I did not want the cruise and did not accept the prize. Somehow through all the paperwork they have my SSN. How do I show this on my tax return, given that I have to report it because of the IRS' matching program but I did not receive any value? Thanks.  

[JohnW152]

As you say, since the prize value was reported on Form 1099-MISC, the IRS will expect to see it as income on your tax return.  So you'll need to enter it in TurboTax, then make an adjustment to offset the amount. 

To do this in TurboTax Online: 

1. Open TurboTax Online
2. Select Tax Home in the left pane
3. Select the dropdown to the right of Wages & Income
4. Select Pick up where you left off, Review/Edit or the edit pencil
5. On the Great! We've got your income info page, select the dropdown to the right of Other Common Income -- Tax refunds, 1099-G, 1099-NEC, 1099-MISC, 1099-K
6. Select Start to the right of Form 1099-MISC
7. Select Yes on the Did you get a 1099-MISC? page
8. Enter the information from your 1099-MISC on the Let's enter the income from your 1099-MISC page, then select Continue
9. On the Describe the reason for this 1099-MISC screen, enter Prize, then select Continue
10. On the Do one of these uncommon situations apply? screen, select the bullet next to None of these apply, then select Continue
11. On the Did the Prize involve work that's like [your] main job? page, select the bullet next to No, it didn't involve work like [your] main job, then select Continue
12. On the How often did [you] get income for Prize? page, answer appropriately, then select Continue
13. On the Did the Prize involve an intent to earn money? page, select the bullet next to No, it didn't involve an intent to earn money. This indicates to the program that this wasn't self-employment income, so self-employment tax won't be triggered. Select Continue
14. On the Your 1099-MISC summary page, select Done, unless you have more Forms 1099-MISC to enter

NEXT:

To enter the adjustment in TurboTax Online:

1. After the above actions, you should be on the Let's get the details on what you told us earlier… screen
2. Scroll down and select the dropdown to the right of Less Common Income
3. Select Start or Revisit to the right of Miscellaneous Income, 1099-A, 1099-C
4. On the Let's Work on Any Miscellaneous Income page, select Start to the right of Other reportable income
5. On the Any Other Taxable Income? screen, select Yes
6. On the Other Taxable Income screen enter the description Return of Prize, then the amount, as a negative (i.e., -2,000).  Select Continue
7. On the Other Miscellaneous Income Summary screen, you should see the transaction.  Select Done

Make sure that you have some paperwork showing that you returned the prize, in case the IRS asks any questions.

If the TurboTax Online navigation described above doesn't look like what you're experiencing, see the TurboTax Help article Why does the TurboTax navigation menu look different for me?.

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[Taxguy100]

I use TurboTax Premier on the desktop so virtually none of the screens you mention are there. For instance, there is no place to enter a description saying Return of Prize. Where I enter the 1099-Misc, there's a box to click that says Winnings (Prizes, etc.). However, if I prepare another 1099-Misc that is a negative amount to offset my incorrect 1099, and I click on Winnings (Prizes, etc.) again, then my Sch 1 of the 1040 doesn't show the Misc Income at all. That would be OK from a dollar perspective, as the amounts completely offset, except then the IRS would not see that I am reporting the 1099 in the first place, and the matching program will flag it and I'd be in trouble. 

I can check "Other Income" on the 1099-Misc and enter a negative amount. My  Sch 1 then shows the original $2K prize, and then further down a negative amount without explanation. I would think that could be a flag. Any advice would be appreciated. Thanks. 

[Taxguy100]

Ah - I think I found the best way is not to enter another 1099-Misc. Click on Sch 1, Line 8z brings up "Other Income Statement" and there I can enter a description and a negative amount.

Ideally the best thing is to get the 1099 issuer to correct the 1099 in the first place, if they will. That could be a big process. 

[DaveF1006]

Yes, this may trigger an IRS inquiry but to negate the income you mention, this is the only way to negate the income in Turbo Tax. Just to be clear, here is how to enter.

Once you entered the 1099 MISC, here is how to negate the income.

1. log into your account
2. Select Wages and income
3. Less Common income
4. Miscellaneous Income, 1099-A, 1099>start
5. Scroll to the bottom of the page to Other Reportable Income
6. Other taxable income, answer yes
7. Then give a brief description of the income and the amount listed..

Once this appears in a summary screen, click on the Add Miscellaneous Income Item and  then describe this as 1099 MISC received for prize that was returned and then record the amount as a negative number. In the description box, you can add as much detail as space permits.

@Taxguy100