1099 misc box 3 damages/relocation expenses. can I deduct expenses against it?

If this concerned your property, reduce the basis of that property. 

If not, and this covered relocation, use the relocation expense against it. 

First enter the 1099-MISC:

Click on Federal  then Wages & Income 

When you get to the Income section, Scroll down to Other Common Income and Click Show more

Click Start or Revisit for Form 1099-MISC

Enter a description for the non-work income, such as “relocation for pipeline” for the reason and Continue

Click “None of these apply.” at the bottom of the list for “Does one of these uncommon situations apply? And Continue

Answer “No, it didn’t involve work like my main job.” on the next screen and Continue.

Click the year you got the reward and Continue (if you received this income for more than 2 years, the IRS will consider it as self-employment)

Answer “No, it didn’t involve an intent to earn money.” on the next screen and continue.

Do you have another 1099-MISC? Click No and Continue

Click Done.

The income will show as a line item on line 21 of Schedule 1 of the 1040 and not as Self-employment. 

Next, make the adjustment for the damage:

Click on Federal,,,Wages & Income,,,,scroll down to the last section "Less Common Income"

Scroll down to the last choice "Miscellaneous Income, 1099-A 1099-C" and Start

Scroll down to the last choice "Other reportable income" and Start

For the Description enter "Reduction in basis of damaged property"; or "forced relocation "

Enter the amount of the award that you are attributing to the damage or relocation costs AS A NEGATIVE NUMBER 

Click Continue and Done

The 1099-MISC and your adjustment will show on Schedule 1 line 21 and flow to the 1040.