Turf replacement on federal form.

[paris37]

I cannot get the info on my 1099 misc form for the turf replacement program on my federal form. I got the exclusion entered on the state, but on the federal form it keeps wanting to list it as a business expense, which we do not have, and I cannot get it entered correctly.help please! Thanks in advance.

[KrisD15]

Which state was this from?

Was it for water conservation? 

Are you trying to add the rebate reported on Form 1099-MISC as "Other Income" on your Federal return or do you think it should be non-taxable? 

If you enter the 1099-MISC and be sure to select 

No, not like work

No, not with intent to earn money

Only received this one tax year

It will be reported as "Other Income" on Schedule 1 and flow to your 1040 line 8. 

[paris37]

Thanks for answering. I’m trying to add it. I know there is an exclusion for California and have figured that out, but it won’t let me just add the 1099 misc in federal without a link to another schedule that will count it and non

e of them seem appropriate. Thanks for any help you can give.

[paris37]

And yes, it was for water conservation in California. 

[KrisD15]

If you are using TurboTax Home and Business, be sure to enter it on the PERSONAL INCOME section, NOT business.

Personal Income (or Wages and Income) 

Other Common Income

Income from Form 1099-MISC   START or UPDATE

The income SHOULD BE  in box 3

Type "Turf Replacement Program" for the description or something similar

Select "None of these apply" for Uncommon Situations

Select NO, it didn't involve work

Select ONLY got it in 2023 (NO OTHER YEARS)

Select NO, it didn't involve an intent to earn money

Continue and done

The program may at this point say something about reporting expenses if you are using the Home and Business program, but the income should be on Schedule 1 line 8z and flow to your 1040 line 8 as "Other Income" and not business income. 

The program should not bug you about linking it to any other forms or schedules. 

To view your forms, For TurboTax Desktop, switch to Forms (top right) 

To View using TurboTax Online:
Select Tax Tools on the left side-bar
Select Tools from that drop-down
Select “View Tax Summary” on the TOOLS CENTER screen
Select “Preview my 1040” which now appears on the left side-bar
 

[maglib]

 @paris37 

SEE MY LATER COMMENT  NOT THIS ONE!  as not taxable.  Must be entered but, IRS considers these rebates as reductions of costs so while it must be entered you need a negative OTHER INCOME reported to offset if. 

According to the IRS, under IRC Sec. 61(a), gross income means all income from all sources, unless otherwise provided by law. Thus, gross income generally includes rebates. Federal law does provide some exceptions. For example, IRC Sec. 136 exempts energy conservation subsidies from tax. But, expansion of IRC Sec. 136 to water conservation rebates would require a legislative change.

So for Federal you will enter it as OTHER INCOME.  During the state return, you then ned to enter it as adjustment for state income taxes.

Your 1099 Misc should not have any income in box 1,5,9,10 as that would be Self Employment income.

First, you will need to delete the original 1099-MISC you entered so you can start over.  

Here are the steps to enter your 1099-MISC as Other Income and NOT self-employment (Schedule C):

·         Type 1099 misc in Search (upper right of program) and select the Jump to 1099 misc link

·         Enter your 1099-MISC with Box 3

·         Describe the reason for this 1099-MISC, enter UNEARNED INCCOME REBATE

·         Does one of these uncommon situations apply? – check None of these apply

·         Did the income involve work that’s like your main job? – check No, it didn’t involve work like my main job

·         How often did you get income?  once

·         Did the income involve an intent to earn money? – check No, it didn’t involve an intent to earn money

·         TurboTax will now place this in Other Income (rather than self-employment income which requires Schedule C)

NOTE:  If you need additional assistance, please comment and I will assist further.

• If you need to enter boxes 4–6 or 8–17, select My form has other info in boxes 1–18 to expand the form.

[paris37]

Thank you so very much! Your answer was very helpful. My mistake was that I put we received it last year as well, as we did our front yard last year. When I changed it to include only this year, it went right through (just like it did last year!). Paris37

[paris37]

Thank you so very much for your clear and thorough message and offer to help - it made a huge difference. My mistake was that I put we had received it last year as well (as we did our front yard last year), so it kept wanting it to be a business. When I changed it to just this year, it went right through to the correct place (as it did last year). Thanks again - Paris37

[paris37]

Thank you! Everyone was so helpful and made a difference. I was so very frustrated and just trying to do it right. Relieved I can now send it in, with everything in the right place. I appreciate your help and information and time.

Paris37

[maglib]

@paris37  UPDATED

EDITED MY RESPONSE.  CORRECTED BELOW:

IRS requires a 1099 for all amounts over $600.

Yet IRS says:

Taxpayers will make purchases, as a result of those purchases, will be entitled to receive rebates…. The portion of the  purchases that taxpayers can…receive back in cash…does not constitute gross income to taxpayers. It is instead considered a reduction in the cost of the items.  Any energy credits being taken, you would reduce your cost of the item by the rebates received.

When entering the 1099 misc  indicate that it is "IRS considers rebates a Reduction of cost"   Continue and say it is not related to your job. say no it did not involve an intent to earn money.   

Then  you will enter less common income 1099 misc again and make an adjustment for it:

During entry for the 1099misc

1. go to the federal income section
2. scroll to the bottom
3. Miscellaneous Income, 1099-A, 1099-C, Start
4. Scroll to the bottom
5. Other reportable income, Start
6. Other taxable income?
7. Select YES
8. Description IRS considers rebates as reductions of cost
9. Amount, enter your amount as a negative
10. continue

I found this today. 

https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-the-tax-treatment-of-amounts-paid-as-reb...

"

IR-2024-97, April 5, 2024

WASHINGTON — The Department of Treasury and the Internal Revenue Service today issued Announcement 2024-19PDF that addresses the federal income tax treatment of amounts paid for the purchase of energy efficient property and improvements.

Generally, taxpayers who receive rebates for the purchase of energy efficient homes will not include the value of those rebates as income on their tax returns, however they will need to reduce the basis of the property when they sell it by the amount of the rebate.

The Inflation Reduction Act (IRA) statutory language describes performance-based incentives and electrification product subsidies as “rebates.”

Announcement 2024-19 provides that amounts received from the Department of Energy (DOE) home energy rebate programs funded through the IRA will be treated as a reduction in the purchase price or cost of property for eligible upgrades and projects. Accordingly, the consumer that receives an IRA rebate will not be required to report the value of the rebate as income.

Additional information about energy-related tax benefits under the Inflation Reduction Act, such as energy efficient homes, can be found on IRS.gov."