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@hillsboro15269 wrote:

First, I found out there IS a miscellaneous statement.

 

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But is that actually sent with the e-file?  I know a number of years back the Moderator looked into what was sent with the return, and the results were only the specialized statements and the "Preparer Notes".

So unless you know otherwise, based on what we were told before, I would assume that statement is NOT sent with the return.  I recommend attaching a PDF of anything you want.

However, from what I've heard from many sources is that the IRS isn't going to read that statement anyways.  If fthey want to look into the tax return, they are going to do the audit or correspondence regardless if there is an explanation statement or not.  So from that viewpoint, I wouldn't bother doing it.

I do what Lisa does too ... report it on Schedule C, then "back it out" with an equal deduction as an "other expense" and titled with the brief explanation of the situation (such as "payment was nontaxable reimbursement").