Non-taxable 1099-misc income

[Taxpoor9to5]

I received a 1099-MISC for Capital Credit Refund from a Co-Op for my parent's account upon their death. The refund was for money they paid 100% for residential services, and never deducted from their taxes. The Co-Op suggests I just not enter the 1099-MISC information, but, instead include a written statement referencing the amount, payor info, including FEIN and why I did not include the income. How do I include that statement in TT Deluxe? Will I still be able to e-file? I initially entered the info as income and then added an "other income" entry with an equal NEGATIVE number to bring the net amount to $0. When I attempted to do that, my return became ineligible for electronic submittal. I would like to use the e-file method if possible.

[JohnW152]

Because the Capital Credit Refund was reported on Form 1099-MISC, the IRS will expect to see it as income on your tax return.  So you'll need to enter it in TurboTax, then make an adjustment to offset the amount. 

To do this in TurboTax Online: 

1. Open TurboTax Online
2. Select  Tax Home in the left pane
3. Select the dropdown to the right of Wages & Income
4. Select  Pick up where you left off, Review/Edit or the edit pencil
5. On the Great! We've got your income info page, select the dropdown to the right of Other Common Income -- Tax refunds, 1099-G, 1099-NEC, 1099-MISC, 1099-K
6. Select Start to the right of Form 1099-MISC
7. Select Yes on the Did you get a 1099-MISC? page
8. Enter the information from your 1099-MISC on the Let's enter the income from your 1099-MISC page, then select Continue
9. On the Describe the reason for this 1099-MISC screen, enter Capital Credit Refund, then select Continue
10. On the Do one of these uncommon situations apply? screen, select the bullet next to None of these apply, then select Continue
11. On the Did the Capital Credit Refund involve work that's like [your] main job? page, select the bullet next to No, it didn't involve work like [your] main job, then select Continue
12. On the How often did [you] get income for Capital Credit Refund? page, answer appropriately, then select Continue
13. On the Did the Capital Credit Refund involve an intent to earn money? page, select the bullet next to No, it didn't involve an intent to earn money.  This indicates to the program that this wasn't self-employment income, so self-employment tax won't be triggered.  Select Continue
14. On the Your 1099-MISC summary page, select Done, unless you have more Forms 1099-MISC to enter

NEXT:

To enter the adjustment in TurboTax Online:

1. After the above actions, you should be on the Let's get the details on what you told us earlier… screen
2. Scroll down and select the dropdown to the right of Less Common Income
3. Select  Start or Revisit to the right of Miscellaneous Income, 1099-A, 1099-C
4. On the  Let's Work on Any Miscellaneous Income page, select Start to the right of Other reportable income
5. On the  Any Other Taxable Income? screen, select Yes
6. On the  Other Taxable Income screen enter the description Capital Credit Refund, then the amount, as a negative (i.e., -1,000).  Select Continue
7. On the  Other Miscellaneous Income Summary screen, you should see the transaction.  Select Done

If the TurboTax Online navigation described above doesn't look like what you're experiencing, see the TurboTax Help article Why does the TurboTax navigation menu look different for me?.

**Say "Thanks" by clicking the thumb icon in the post