Part of our family income was generated 1099. We had only sent in one quarterly payment to the IRS based on the earnings. At the end of the year we simply deducted the redeemed lawful money from the our total. For 1099 there had been no payments made towards SS and Medicaid/Medicare so that was simply calculated by the tax software and deducted from money that was being refunded. No issues with the Feds. I am still waiting on the State. They are usually pretty slow. I guess I will contact them next week now that I am thinking about it.