Since the funeral benefit was reported on Form
1099-MISC and the IRS has a copy of that form, they will expect to see it reported on your tax return. That does not mean that it should be fully included
as taxable income though, since it was divided among you and your
siblings. Be sure that you have some documentation
to provide (if asked) that shows the amount was split four ways. Also, be sure to check with your siblings to
determine whether they also received a Form 1099-MISC and to inform them that
they need to report their share as income.
Furthermore,
based on your description of “funeral benefit” I cannot tell if the amount
should be taxable at all. I would
suggest that you contact the payer for further guidance with regard to whether
it should be taxable. If it is not, you
can use the steps outlined below to report it on your return and make an
adjustment for 100% of the amount instead of 75%.
Reporting this in TurboTax will be a two-step
process, first to include the 1099-MISC as income and then to make a negative
adjustment to remove the portion paid to your siblings.
To include the 1099-MISC as a part of your tax
return, follow these steps:
On the top row of the
TurboTax online screen, click on Search (or for CD/downloaded TurboTax
locate the search box in the upper right corner)
This opens a box where you
can type in “1099-MISC” (be sure to enter exactly as shown here) and
click the magnifying glass (or for CD/downloaded TurboTax, click Find)
The search results will
give you an option to “Jump to 1099-MISC"
Click on the blue “Jump
to 1099-MISC” link
Answer Yes you did receive a 1099-MISC
Fill in the details from
your 1099-MISC then click Continue
Provide a short description
for the reason you received the 1099-MISC then click Continue
On the next screen titled,
“Does one of these uncommon situation
apply?” choose the last option, None
of these apply and then click Continue
On the next screen asking
if the 1099 involved work like your main job, answer No and click Continue
On the next screen, check
the box that you received the income in
2016 and then click Continue
Finally, choose “No, it didn’t involve an intent to earn
money” and click Continue
Answer the questions on the
next couple of screens to finish the process
Now the income shown on the Form 1099-MISC has been added to your
return. Next, it will be “removed” from
the return.
Follow these steps:
Go to Federal Taxes > Wages & Income and scroll to the bottom of
the screen to the Less Common Income section
(expand the section by clicking Show
More if necessary)
Click Start or Update beside Miscellaneous Income, 1099-A, 1099-C
Scroll to the bottom of the
list and click Start or Update beside Other Reportable income
Answer Yes to move forward
Enter a brief description,
such as “funeral benefit adjustment,” and 75% of the amount reported on the
1099-MISC as a negative number then click Continue
Click Done
When you see your Form 1040, the amount shown on the Form
1099-MISC will be reported twice on line 21 – once as a positive amount for
100% of the payment and once as a negative amount for 75% of the payment.
