1099-Misc for reimbursed Medical Expenses

[CW82]

Help, I was injured as a passenger on a bus at the airport.  The bus companies insurance reimbursed my medical expenses.  I received a 1099-Misc. with box 6 filled in with the total.  Shouldn't it be in box 3 and should it be income when it was a reimbursement?  

[DMarkM1]

You are correct the payment to you should not be in box 6.  In fact what should have happened is the insurance company pays the medical bills and issued them a 1099-misc with box 6 filled.  If you had already paid the bill then the medical facility would then refund your money and no tax event for you at all. 

Payments for physical injury generally are not taxable.  Here is a link for reference. 

Next best option is to have a corrected 1099-Misc with the amount moved to box 3.  You would report that 1099 form box 3 information. 

You would also then enter a negative amount to deduct the medical expenses you paid as "Other reportable income" in the "Less Common Income" topic.  That would satisfy the reporting requirement for the 1099 and still zero out the income on your return.                         

[CW82]

This was reported to me by CHUBB.  When I call a recording says corrections will only be considered with company letterhead.  There is no physical person to talk to.  Can I put the amount from box 6 on my taxes and then put the amount as a credit in other income?  This was my plan but thought I should include an explanation as reimbursed medical bills on the other line.

Thank you for your quick reply. 

[DMarkM1]

The issue is the amount in box 6 if entered as such will automatically require/generate a schedule C for self-employment. 

I think the workaround will be to enter the box 6 amount as other reportable income and in the description put 1099-Misc box 6.  Next enter the negative amount as other reportable income to zero it out with description accident injury expenses.  

I would also remind you that you cannot exclude the reimbursement income and also deduct the medical expenses.  It's one or the other.

[edited 5/12/2021 12:27pm EDT]

[tonyabp1]

I had this exact same situation from Chubb on a Worker's Compensation claim. Can you show me an example of how you suggested that the 1099-MISC be completed? And does that mean that I can correct it this way on TurboTax while filing my taxes or does Chubb have to send me a corrected form??

[MonikaK1]

If the payer won't issue a corrected form, then you can follow the previous poster's suggestion. 

Enter the amount shown on the Form 1099-MISC for medical payments in TurboTax under Wages and Income, Other Reportable Income, and identify it as 1099-MISC box 6 medical.

Then, make another entry for the same amount, but make it a negative number (add a minus sign in front of the number). Enter in the description that you are subtracting nontaxable medical payments.

Again, note that you cannot deduct the medical expenses if you don't report the payment.

See this tax tips article for more information about Form 1099-MISC.

See also this IRS analysis regarding the taxability of settlements and judgments.

[grantph]

I received a 1099 misc  for a fall on a greasy floor in a restaurant.  they used box 6, so I know I need to file as above.  The company paid the insurance back, but not for the copays and deductable I paid, that was on the 1099.   

can I do deductions for mileage as well?  that was part of the settlement as I was doing almost 100 miles daily for therapy. 

Then there is the time my husband took off to drive me, that is included in the check.

I got a small amount for  "pain"  so the payment minus what it cost me in medical bills and mileage would get taxed I assume, (we file jointly and earn about the same, so it makes no difference in the end as to his missed wages compensation, so for ease I would assume its better just to be added to my income).

thanks