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squeezil1
Level 2

1099-NEC refund for cancelled college class

I have received a 1099-NEC for a cancelled college course that my daughter (my dependent) was  take in summer 2020.  She had paid $400 on credit card for the course, and I paid an additional $1,700 ($2,100 total).  Once the class was cancelled, the university sent refund checks for those two amounts.  She received the $400 check and I received the $1,700 check during summer 2020.

 

A 1099-NEC for the $1,700 portion arrived in February 2021.  I quickly learned the 1099-NEC is typically used to reflect payments to self-employed individuals or contractors.  However, I am neither self-employed nor a contractor, nor is my daughter.  The $1,700 was certainly not income; it was a refund. 

 

I expect a 1099-NEC for $400 will soon arrive based on the refund sent to my daughter.  One additional piece of the scenario:  the university is not my daughter's school, but an out-of-state university that offered a course that she wanted to take.  It is a state school in North Carolina.

 

I have four questions:  1) Do I enter the 1099-NEC as best I can into Turbo Tax Premier, and then skip the questions about "my business" which does not exist?  2) Assuming my daughter receives a 1099-NEC for the $400 portion of the refund, do I enter that 1099-NEC on my tax return, or on hers?  3) I guess I can enter the $2,100 as a tuition expense in the Education section of Turbo Tax?  4) Because the 1099-NEC was issued by a North Carolina university, do I have to pay or report taxes to North Carolina?

 

Thank you!

1 Best answer

Accepted Solutions
ColeenD3
Employee Tax Expert

1099-NEC refund for cancelled college class

1) You can enter the 1099-NEC as shown at the bottom of the post.

 

2) You would enter the amount on her return. You do not enter your dependent's income on your return. Unfortunately, because of the amount, you will need to file in order to show the IRS that this is not SE income. Had it been $399, you wouldn't have had to file. (You usually must pay self-employment tax if you had net earnings from self-employment of $400 or more)

 

3) You can't take the credit if they reimbursed the money.

 

4) No. It is not income. They reimbursed you.

 

1099-NEC entry:

 

You can add it as other income and then back it out again with an explanation. "Incorrect 1099-NEC. Tuition reimbursement"

 

  • Wages & Income
  • I'll choose what I work on
  • Less Common Income select Start (or Update) for 
  • Miscellaneous Income.
  • Other reportable income and you can enter your own description(s) and amount(s).

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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3 Replies
ColeenD3
Employee Tax Expert

1099-NEC refund for cancelled college class

1) You can enter the 1099-NEC as shown at the bottom of the post.

 

2) You would enter the amount on her return. You do not enter your dependent's income on your return. Unfortunately, because of the amount, you will need to file in order to show the IRS that this is not SE income. Had it been $399, you wouldn't have had to file. (You usually must pay self-employment tax if you had net earnings from self-employment of $400 or more)

 

3) You can't take the credit if they reimbursed the money.

 

4) No. It is not income. They reimbursed you.

 

1099-NEC entry:

 

You can add it as other income and then back it out again with an explanation. "Incorrect 1099-NEC. Tuition reimbursement"

 

  • Wages & Income
  • I'll choose what I work on
  • Less Common Income select Start (or Update) for 
  • Miscellaneous Income.
  • Other reportable income and you can enter your own description(s) and amount(s).

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

squeezil1
Level 2

1099-NEC refund for cancelled college class

Thank you.  To confirm:  on my return, I do not  enter the 1099-NEC under "Income from Form 1099-NEC" but under the "Miscellaneous Income" field?  And then do the same on my daughter's return assuming she too receives a 1099-NEC?

PattiF
Employee Tax Expert

1099-NEC refund for cancelled college class

Yes, you can enter that income under the Miscellaneous Income field. The IRS will match to see that the income was reported. 

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