Question

When entering 1099-misc for amount received as car allowance, how do I answer the question regarding if this involved work that is similar to my main job?

I also received a W2 from my employer. They subtracted out the Fed mileage rate from the amount they reported on the 1099.

I would not report it twice if it has already been reported in another location. I ran into the same issue though.

You will need to report this as income in the following manner.

Go to federal>income and expenses
Other common income>Form 1099-MISC
Now enter the information from the 1099-MISC
Describe the reason for the 1099-MISC say Employee Car Allowance
Select none of the above for the next screen.
When it asks if this is like work that involves your main job, say no because this is a car allowance.
How often do you get this income, you might mentioned you received it in 2021
Then it asks if you had an intent to earn money. On this say no. If you don't say no, then you will be asked to fill out a self-employed business return. You don't wish to do this for a car allowance and that is why your employer subtracted this from the W2 so that FICA taxes would not be assessed. As a result, they issued you a 1099 -MISC thus the income will not be reported twice as kristieklk773 mentions in the previous post.
Now it will be reported on Schedule 1 line 8Z and then reflected in line 8 of the 1040 instead of Self-Employed income.