1099-misc

[efklein001]

I had an investment in my IRA and the investment company did a settlement to the clients.  They refunded monies directly back to my IRA account (no taxable event).  However, they sent me a 1099-misc for the refund.

I'm having issues with them about voiding the 1099, but that may take some time.  If I report the 1099 and pay tax on the amount I will taxed again when I withdraw the funds from my IRA.  Can I just not report the 1099 and be ready to explain to the IRS when they come asking or ?

Any thoughts will be appreciated.

[DanaB27]

Yes, if they stated that they will void the wrongly issued Form 1099-MISC then you do not have to include it in your income, even if they don't void it right away. Yes, it is a good idea to keep documentation in case the IRS comes back with questions.

You don't have to report any income earned within the IRA. You only report distributions to you and these will be reported on Form 1099-R.

[Edited 2/24/2023 | 9:01 am PST]

@efklein001 

[efklein001]

My problem will be if they for whatever reason don't void the 1099 timely. 

[DaveF1006]

Yes, I would follow DanaB27 advice and not report it but keep all documentation and correspondence with the company just in case if the IRS questions it. 

If you do not feel comfortable with this, you can report the 1099 MISC and then when it is voided, you can file an amended return removing the 1099 MISC.  In the amendment process, you will be able to explain in detail the reason why you are removing the 1099 MISC. To amend:

1.  Log into Turbo Tax
2. Go to My Tax Returns and Documents
3. Select year 2022
4. Select amend/change 2022

@efklein001