1099-MISC Rental Income and Box 3 "Other Income"?

[Hjiorst Fjioords]

This is my first full year as a rental property owner, and I am doing my own taxes. I received a 1099-MISC from my property manager showing the expected amount in Box 1 for rental income, and about $1200 in Box 3, "Other Income."  The property manager tells me this amount is for utilities collected from the tenant.  (Owner covers water and garbage.)

Turbotax will not account this as rental income, and wants to count it as self-employment income on Schedule C.  This is increasing my tax liability.

Based on everything else I have read, and what my property manager tells me, money from the tenant for utilities that I pay for is still considered rental income as far as the IRS is concerned.  The amount paid by us for water and garbage is certainly included as an expense for the property.

Should my property manager issue a corrected 1099? If they don't, can I adjust the numbers by deducting that box 3 amount from my expenses and also not reporting the Box 3 as income? I worry about that kind of self-help because the IRS received the 1099 and my return won't match their numbers.

Any insights appreciated. Thanks!