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acaschato
New Member

I am an adult foster care provider and have been for 10 years. This year I received (for the first time) a 1099 for non employee compensation, in past tax exempt Advice?

 
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Accepted Solutions
FaithY
New Member

I am an adult foster care provider and have been for 10 years. This year I received (for the first time) a 1099 for non employee compensation, in past tax exempt Advice?

You have a couple choices. You can not enter the 1099 since the income is tax exempt. The IRS may contact you to follow up on why you didn't report the 1099, and if they do you can respond to their notice by documenting that you received the 1099 because you are a foster care provider.

Another choice is to report the 1099 income, allowing IRS to do their matching process, and then reversing out the income so that your adjusted gross income (AGI) is unchanged. 

How enter the 1099:

1. Sign on to TurboTax and continue with your tax return.

2. Click the Federal and Wages & Income tabs

3. Click Start next to "Miscellaneous Income, 1099-A, 1099-C" 

4. Click Start next to "Other reportable income"

5. Click Yes when it asks "Any Other Taxable Income?"

6. Enter a description and amount on the page "Other Taxable Income" (ie. 1099 issued by foster care agency). Ignore the warning that says "Do not enter income reported on form 1099-misc.

7. Go back and start the "Miscellaneous Income, 1099A, 1099-C" interview again and follow steps 4 and 5 above.

8. Enter a description and a negative amount. (ie. 1099-Misc. IRC Section 131(a) exclusion of qualified foster care payments.

The steps above will allow you to report the 1099, exclude it from your AGI, and give a reason why


26 U.S. Code § 131 - Certain foster care payments:

(a) General Rule Gross income shall not include amounts received by a foster care provider during the taxable year as qualified foster care payments.

https://www.law.cornell.edu/uscode/text/26/131

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4 Replies
FaithY
New Member

I am an adult foster care provider and have been for 10 years. This year I received (for the first time) a 1099 for non employee compensation, in past tax exempt Advice?

You have a couple choices. You can not enter the 1099 since the income is tax exempt. The IRS may contact you to follow up on why you didn't report the 1099, and if they do you can respond to their notice by documenting that you received the 1099 because you are a foster care provider.

Another choice is to report the 1099 income, allowing IRS to do their matching process, and then reversing out the income so that your adjusted gross income (AGI) is unchanged. 

How enter the 1099:

1. Sign on to TurboTax and continue with your tax return.

2. Click the Federal and Wages & Income tabs

3. Click Start next to "Miscellaneous Income, 1099-A, 1099-C" 

4. Click Start next to "Other reportable income"

5. Click Yes when it asks "Any Other Taxable Income?"

6. Enter a description and amount on the page "Other Taxable Income" (ie. 1099 issued by foster care agency). Ignore the warning that says "Do not enter income reported on form 1099-misc.

7. Go back and start the "Miscellaneous Income, 1099A, 1099-C" interview again and follow steps 4 and 5 above.

8. Enter a description and a negative amount. (ie. 1099-Misc. IRC Section 131(a) exclusion of qualified foster care payments.

The steps above will allow you to report the 1099, exclude it from your AGI, and give a reason why


26 U.S. Code § 131 - Certain foster care payments:

(a) General Rule Gross income shall not include amounts received by a foster care provider during the taxable year as qualified foster care payments.

https://www.law.cornell.edu/uscode/text/26/131

acaschato
New Member

I am an adult foster care provider and have been for 10 years. This year I received (for the first time) a 1099 for non employee compensation, in past tax exempt Advice?

Thank you! Worked perfect for me!
FaithY
New Member

I am an adult foster care provider and have been for 10 years. This year I received (for the first time) a 1099 for non employee compensation, in past tax exempt Advice?

You're welcome, and I am very glad it worked!
abhiol
Returning Member

I am an adult foster care provider and have been for 10 years. This year I received (for the first time) a 1099 for non employee compensation, in past tax exempt Advice?

FaithY,

Can you please provide me with directions on how I navigate to the "Any other taxable income?" part in the Home and Business software version.

I believe your directions apply to the online version, is that correct? 

In the "Home and Business" version, I cannot find this path of: Federal>Wages & Income>Miscellaneous Income>Other reportable income>anyother taxable income. 

Please can you help me navigate to this point in the "Home and Business" version.

Thanks. 

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