1099-Misc for RV Warranty Work

[GunslingerPop]

I own a Fifth-wheel RV that I purchased new in 2017. In 2018 I complained to the manufacturer (Keystone RV) about the lengh of time the RV was undergoing warranty repair and also a repair that I had paid for out of pocket, that I felt should have been covered unter warranty. Keystone offered $2000 for "loss of use, time out of service, fees and out of pocket expenses". They also reimbursed me for the repair that I paid out of pocket ($918.86). 

Keystone RV then sent me a 1099-Misc for $2918.86

This is not income... How do I handle this?

[GunslingerPop]

Just to clarify... Keystone reimbursed me in 2019, so the 1099-Misc is from 2019

[AmyC · Accepted solution]

I would be on the phone telling them to send a corrected form with a zero on it. They gave you a form saying that it is income. Here is what the IRS says about 1099 income:

At least $600 in:

• Rents.
• Services performed by someone who is not your employee.
• Prizes and awards.
• Other income payments.
• Medical and health care payments.
• Crop insurance proceeds.
• Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish.
• Generally, the cash paid from a notional principal contract to an individual, partnership, or estate.
• Payments to an attorney.
• Any fishing boat proceeds.

You are certainly not a contractor, this was not a bonus or a prize. They might be trying to say it is "other income payment".

There is a lawsuit that was similar to your situation. The guy had emails proving he asked for a corrected 1099-MISC and the IRS did allow the deduction.

If you can NOT get a corrected form, enter the 1099-MISC as income and then adjust your income as a negative amount of the same under "other income" and label it as erroneous receipt of 1099-MISC. Keep proof that you asked for a correction and records of the whole situation.

Enter the 1099-MISC:

1. Income and Expenses
2. Other Common Income
3. Form 1099-MISC, start
4. screen Who paid you
5. enter the 1099-MISC information
6. Describe the reason 
7. warranty reimbursement
8. continue
9. Screen Does one of these uncommon situations apply?
10. Select None of these apply
11. continue
12. Screen Did the 1099 involve work that's like the main job?
13. Select No
14. continue
15. screen How often did he get income?
16. Select got it in 2019 
17. continue
18. screen Did it involve an intent to earn money?
19. Select No 
20. continue

Take it back out again:

1. Go to Income and Expenses
2. Scroll down to Less Common Income
3. May need to select Show More
4. Select bottom, Miscellaneous Income and Start
5. Select bottom, Other reportable income and Start
6. Screen, Any Other Taxable Income?
7. Select Yes
8. Screen Other Taxable Income
9. Enter Description, erroneous 1099-misc from warranty
10. Next to your name, enter a negative sign and the amount on your 1099-MISC.
11. Continue

Good luck!

[Stacy_12]

Hi Amy,

Do you know what the case was for the lawsuit you reference?  I would like to read the detail behind it.

thank you!

"There is a lawsuit that was similar to your situation. The guy had emails proving he asked for a corrected 1099-MISC and the IRS did allow the deduction."

[Taxvictim]

we are going through the same thing with Keystone.  Were you able to get them to correct this?

thanks

j

[GunslingerPop]

Keystone refused to amend/cancel the 1099. I did send Keystone an email with a signed letter (attached as a pdf file) requesting them to change the 1099, along with the text of the letter embedded in the email itself. I specifically stated in the letter that the “income” stated on the 1099 did not meet any of the IRS criteria for income.  (I felt that this was an important step to show IRS that Keystone refused to correct their error). Keystone did reply to the email with (in my opinion) a very weak excuse for their refusal. 

On my tax return I declared the income and then deducted it later, following AmyC’s recommendation. IRS processed my return without question. But, of course, they have 7 years to do so. I saved all documents, receipts and emails just in case. 

Let me know if I can be of further assistance. 

[Taxvictim]

Thank you!