We received an Account Maintainence Fee Refund from Morgan Stanley and had $8.57 Fed Tax Withheld. Where do we report that in our filing?

[rongrosser]

I'm assuming the Gross amount of $85.65 is income but don't know how to declare it.

[DianeW · Accepted solution]

You can report this income by using the steps below in TurboTax Premier.  The federal withholding will have to be entered in a separate step which is also shown below.

This would be considered a "recovery" in tax jargon.

A recovery is a return of an amount you deducted or took a credit for in an earlier year. The most common recoveries are refunds, reimbursements, and rebates of itemized deductions. You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit.

Tax benefit rule. You must  include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year.

1. Federal Taxes > Wages & Income > 
2. Scroll to Other Less Common Income > 
3. Select Miscellaneous Income > Reimbursed Deductions From a Prior Year (see the image attached)

To report the federal withholding on this income you can use the steps below.

Sign into your TurboTax Premier account the enter in the following way.

• Federal Taxes
• Deductions &  Credits
  
• Estimates and Other Taxes Paid
  
• Other Income Taxes
• Scroll to Withholding not already entered on W2 or 1099 > Start
  
• Enter the federal withholding here