1099-MISC

[potatoedad]

I received a 1099-MISC for a reimbursement from the city, not income. I paid for repairs done to city sidewalks and driveway approach. The 1099-MISC entered as income adversely affects my return. Can I claim the money I spent on the repairs as a deduction?

[ThomasM125]

You can claim the expenses, but you will need to treat the income as self-employment income to do so. If you report it as such, however, your net income will be subject to a self-employment tax of about 15% in addition to your income tax, so it may not save you any taxes in the end.

[Carl]

Actually, there's a better way, but only *if* you have two things.

1) Receipts and paperwork to prove that "you" paid for the work

2) Some type of documentation from the city that proves they reimbursed you for the work, and that the payment was for "THAT" work, and not something else.

So if "called on the carpet" by the IRS, can you do both above?

[janicejoel]

@Carl 

Just saw this thread and had a follow-up question:

I received a 1099-misc for a rebate I received from City of Los Angeles to partially reimburse for sidewalk repair costs. I'm hoping I don't have to pay taxes on the rebate. I have all the appropriate paperwork in my files. Is there a way in Turbotax to include the 1099-misc but show that it's partial reimbursement and therefore shouldn't be taxes, or does your method suggest I just don't include it and then deal with it if questioned? I like to do things properly. 🙂 Thanks!

[ThomasM125]

You can enter the Form 1099-Misc as income and then enter an adjustment to lower it down to the correct taxable amount as follows:

1. From the Federal menu in TurboTax find Wages and Income 

2. Find Less Common Income

3. Choose Miscellaneous Income, 1099-A, 1099-C

4. Choose Other Reportable Income

5. Enter a description of the adjustment and the amount as a negative number

[janicejoel]

@ThomasM125  Thank you!