1099-NEC reimbursement for expenses - not a business or hobby

[wgmueller]

I received a 1099NEC to reimburse me ($10,280) for an equipment purchase made in the course of public service.  (I bought it, they paid me back, exactly)

It is a one-time thing, not even a hobby.

I entered the 1099-NEC and it is now is attributed to income.  TurboTax did not attribute it to a Schedule C, so now it is free floating as an income item.

Where do I enter my purchase expense ($10280) to offset the 1099-NEC?

How do I make them match up to net out?

[AliciaP1]

The best way to enter this to net it out is to enter the 1099-NEC like business income and enter the equipment purchase as a business expense.  You will need to delete your 1099-NEC entry to be sure you mark None of these apply to me on the Does one of these uncommon situations apply? screen.

To delete your 1099-NEC you can follow these steps:

1. Within your return, click on Tax Tools in the black menu on the left side of the screen.
2. Click on Tools.
3. Click on Delete a Form. 
4. Scroll down to your Form 1099-NEC and click Delete.
5. Under Federal in the black menu bar click Wages & Income to get back into your tax returns.

To re-enter the 1099-NEC and enter the expense to offset the income you can follow these steps:

1. Sign in and open or continue your return.
2. Search for 1099-NEC and select the Jump to link.
3. Answer the questions and continue through to enter the information from your form.
   • Be sure to choose None of these apply to me on the Does one of these uncommon situations apply? screen.
4. Continue through the interview until you are done.
5. Using the magnifying glass at the top of the page search for Schedule C.
6. Use the Jump to link that shows in the results.
7. Click Review for the business added from the 1099-NEC
8. Choose It's something else on the OK - how does your Reimb work fit into your big picture? screen.
9. Mark that the business started AND stopped in 2022 (you can choose any date in the year for the start date or just the transaction date if you know it)
10. Click None of these apply and Continue through the rest of the interview answering No and None of these apply to the questions.
11. Click Get Started on the Let's find all the expenses... screen and choose the Supplies category then Continue.
12. Answer No to the suggested expense categories and Keep Going.
13. Click Start next to Supplies and enter the cost of the equipment purchased and Continue.
14. Scroll down and click I'm done and continue entering your remaining tax return information.

[wgmueller]

Thank you.

Yours is the specifics of the answer.

I had thought of the transactions as reimbursement that was nobody's business and as sort of a non-business charitable transaction.  But the 1099-NEC generated a form..  Then I had  thought of it as a business. And named the business as "Reimbursement for XXX."

The IRS and the TurboTax pushed me to treat the transaction as I were a business.  So I gave in and  did, and you provided me with the mechanism.  I don't like it as a characterization of what I did.  But I now think of it as a "business transaction" instead of an 'on-going business."

But, I paid attention to the little window of "tax to be paid".  I knew it should be a net zero.  As long as I knew that the 1099-NEC could be attributed to the expenses - I kept at it, until I ended up with a combination that netter them out together.

Thank you for the key strokes to do that.