I received a 1099-misc for capital credits from a Telephone corp. How do I enter it if it is not taxable? ( it was for personal home)

[chelsielang]

Our telephone corp. keeps sending out 1099-misc even though everything I have read says they are not taxable if they were personal use.  How do I not pay tax on it?

[MichaelDC · Accepted solution]

Capital credits are a return of money paid for electricity in a previous year and are generally not taxable income for residential consumers. Since you received a 1099-MISC, you will enter it as stated here and then create an offset entry with instructions at the bottom.

Please feel free to post any additional details or questions in the comment section.

With thanks to SuperUser Carl:

"Under the Wages & Income tab (or Personal Income tab) scroll down to Other Common Income and elect to start/update Income from form 1099-MISC. Then click YES to indicate you have a 1099-MISC.

Enter the 1099-MISC exactly as printed, and then Continue.

Enter the reason you got this money – be it scholarship, bonus, streaking butt naked across the 50 yard line of the super bowl, whatever. Then continue.

Select None of these apply, then Continue.

Select No, it didn’t involve work….. and Continue.

Select ONLY the tax year for which this specific 1099-MISC was issued. Do not select the year that you received the 1099. Select the year for which the 1099-MISC was issued. Select no other year. Then Continue.

Select No, it didn’t involve an intent to earn money, then Continue.

Select NO, then Continue.

Click the DONE button, and that does it."

To create an offset entry:

In TurboTax 2017, offset your income by taking these steps:

1.    Federal tab (left of screen)

2.    Then Wages & Income

3.    Pick, “I’ll choose what I work on” Button

4.    Scroll down to Less Common Income

5.    Pick start next to Misc Income, 1099-A, 1099-C

6.    On the next screen choose other reportable income (at the bottom)

7.    Say yes that you have other taxable income.

8.    For description enter "non-taxable capital credits to homeowner." Enter the amount of the income with a minus sign (-) in front of it.

This effectively removes your income from the tax calculations and will appear on line 21 of your Federal Form 1040 as a negative dollar amount.

[Sdm57]

Can this only be done using the self employed edition?

[LeonardS]

No, you do not have to use self employed edition to report your capital credits as non-taxable income.

To enter your 1099-MISC Capital credits as nontaxable income in TurboTax follow these steps: 

1. Log in to your TurboTax account if it is not open.
2. Select the Wages & Income tab.
3. Scroll down to Less common income click Show more.
4. On the page Let's Work on Any Miscellaneous Income click on Other reportable income.
5. On the page Any Other Taxable Income?  select yes.
6. On the page, Other Taxable Income enter Non-taxable Capital credits for the description and the amount.
7. Select continue and answer No on the next page.

To offset your capital credits you will add a second 1099-MISC entry by following these steps: 

1. Log in to your TurboTax account if it is not open.
2. Select the Wages & Income tab.
3. Scroll down to Less common income click Show more.
4. On the page Let's Work on Any Miscellaneous Income click on Other reportable income.
5. On the page Any Other Taxable Income?  select yes.
6. On the page, Other Taxable Income enter Non-taxable Capital credits for the description and the amount as a - amount.
7. Select continue and answer No on the next page.

@Sdm57

[Skinnerj]

The solution for 2017 does not appear to work in 2024. Do you have a new or amended reply?

[ThomasM125]

You enter the Form 1099-MISC as you normally would, in the Wages and Income section, then Other Income then Income from Form 1099-MISC. To enter the adjustment to income follow these steps:

1. From the Federal menu in TurboTax find Wages and Income 

2. Find Less Common Income

3. Choose Miscellaneous Income, 1099-A, 1099-C

4. Choose Other Reportable Income

5. Enter a description for the adjustment and the amount as a negative number

@Skinnerj

[Mialou]

When I do this under Less Common Income, Misc Income 1099-a, 1099-c, Other reportable Income, it goes to other taxable income where I need to enter a description and amount.  My question is, it states on the page Do Not Enter Income reported on Form 1099-MISC.  Since I am entering a negative amount to offset the previous 1099-misc, is this okay?

Thanks

[Mialou]

When I go the do the offset entry under Less Common Income, Misc Income 1099-a, 1099-c, Other reportable Income, it goes to other taxable income where I need to enter a description and amount.  My question is, it states on the page Do Not Enter Income reported on Form 1099-MISC.  Since I am entering a negative amount to offset the previous 1099-misc, is this okay?

Thanks

[JamesG1]

Yes.  I would follow the directions of @ThomasM125.

You have reported the IRS form 1099-MISC correctly.  The reversal notifies the IRS that you recognize the legitimacy of the IRS form.  The reversal records the non-taxability of the payment.

Retain any paperwork with your tax records should a tax authority have a question about the transaction at a later time.

@Mialou