Prize Winnings

[tshearing]

I received a 1099-Misc for a $3000 gift card that I won.  I entered it under "Income from 1099-Misc".   Under the Less Common Income, Miscellaneous Income, TurboTax has a credit for $3000.  This information is then transferred to Schedule 1 with my $3000 entry in 8i and the credit in 8z with the notation "Adjustment to Value of Prizes and Awards".  What is the credit for?   Isn't the prize taxable?

[DawnC]

Yes.  You only need to enter an amount in the FMV box if there is an adjustment required.   If no adjustment is required, enter zero (or leave it blank) in the adjustment box and the full amount will be taxable.    Whatever you enter as an adjustment will reduce the taxable amount.   If you receive a 3K tax document for a prize worth only 2K, you would enter 1K as an adjustment.   

Prizes and awards in goods or services must be included in your income at their fair market value.