Since the reimbursement was reported on Form
1099-MISC and the IRS has a copy of that form, they will expect to see it reported on your tax return. That does not mean that it should be included
as taxable income though, especially if you have documentation to provide (if
asked) that shows it was a reimbursement and not income to you.
Reporting this in TurboTax will be a two-step
process, first to include the 1099-MISC as income and then to make a negative
adjustment to remove it.
To include the 1099-MISC as a part of your tax
return, follow these steps:
- On the top row of the TurboTax
online screen, click on Search (or for CD/downloaded TurboTax
locate the search box in the upper right corner)
- This opens a box where you can
type in “1099-MISC” (be sure to enter exactly as shown here) and
click the magnifying glass (or for CD/downloaded TurboTax, click Find)
- The search results will give you
an option to “Jump to 1099-MISC"
- Click on the blue “Jump
to 1099-MISC” link
- Answer Yes you did receive a 1099-MISC
- Fill in the details from
your 1099-MISC then click Continue
- Provide a short
description for the reason you received the 1099-MISC then click Continue
- On the next screen titled,
“Does one of these uncommon
situation apply?” choose the last option, None of these apply and then click Continue
- On the next screen asking
if the 1099 involved work like your main job, answer No and click Continue
- On the next screen, check
the box that you received the
income in 2016 and then click Continue
- Finally, choose “No, it didn’t involve an intent to
earn money” and click Continue
- Answer the questions on
the next couple of screens to finish the process
Now the income shown on the Form 1099-MISC has been added to your
return. Next, it will be “removed” from
the return.
Follow these steps:
- Go to Federal Taxes > Wages & Income and scroll to the bottom
of the screen to the Less Common
Income section (expand the section by clicking Show More if necessary)
- Click Start or Update
beside Miscellaneous Income,
1099-A, 1099-C
- Scroll to the bottom of
the list and click Start or Update beside Other Reportable income
- Answer Yes to move forward
- Enter a brief description,
such as “reimbursement adjustment,” and the amount reported on the
1099-MISC as a negative number then click Continue
- Click Done
When you see your Form 1040, the amount shown on the Form
1099-MISC will be reported twice on line 21 – once as a positive amount and
once as a negative amount.
Use these steps to Preview
your Form 1040 to check Line 21:
- Click My Account at
the top of your screen
- Click Tools
- On the Tools Center
page, below “Other helpful links…”, click View Tax Summary
- Click Preview My 1040
shown at the top of your screen
- Use the Back choice
at the top of the screen to return to your tax return
