I have a General Contractor (GC) building my new home. I got a 30 year loan from a bank and the bank is giving 5 draws to the GC that total to the entire loan. In my contract with the GC there is a $20,000 allowance for the kitchen cabinets and appliances. I spent $20k of my own money to purchase the cabinets/appliances. The General Contractor wrote me a check for $20k to reimburse me. Do I have to pay taxes on the $20k that I received from the GC? How would I report this on my taxes?
As I understand your scenario, you paid the contractor twice for cabinets - Once by paying the $20k in cash on the original contract and once "in-kind" by providing the cabinets yourself. The $20k that you got from the contractor is not income to you, it's just a refund of your overpayment.
I don't think you need to report that at all. Just make sure that you can document that the check that you got back from the contractor matches what you paid for the cabinets and keep that record.