Are capital credits from utility cooperatives entered on 1040?

[CherylW · Accepted solution]

Because it's a return of capital, it's not taxable.

This, from https://www.haywoodemc.com/content/frequently-asked-questions-about-capital-credits

Does the member have to report capital credits on tax returns?
Capital credits are a return of money paid for electricity in a previous year and are generally not taxable income for residential consumers. Commercial and industrial consumers should discuss any capital credits retirements with their tax advisers.

[chelsielang]

but what happens when they send out a 1099-misc?

[CherylW]

A 1099-MISC is taxable, and must be reported on your return.  The IRS gets a copy as well, then matches up to your return.  If you don't believe it's taxable, you need to talk to someone at the co-op.

[srhansen5]

I received a 1099-MISC for a refund of capital credits $681.  When I talked to my coop about why I received it their response was that their tax advisor/attorney told them they must send 1099-MISC to any customers who were sent capital credit checks over $600 because that because they have no way of knowing which accounts are for at home business (ex: farms) versus which accounts are for personal/residential. Further, the coop told me that I should just specify via box 3 on your return that this was a 'non-taxable return of personal expenses'.

I do not find any such question or option in TurboTax to be able to specify "non-taxable return of personal expenses" when I entered the 1099-MISC.  Further, TurboTax is asking me several questions around where I worked to earn the $681 and others which have no applicability to this and it appears that TurboTax is using my 1099-MISC to trigger "Profit and Loss from a Business" tax forms to be included.

How do I properly enter this 1099-MISC in TurboTax so that it is non-taxable?