I am self-employed, and file as sole proprietor with my spouse, married filing jointly. My income is paid in advance as commission for the work I do. I use a cash accounting method. I received commissions in 2019, and included them as income in my 2019 return. But, due to covid, I had to refund many clients in 2020. How do I account for that, as my 1099-NEC only counts what I was paid in 2020, not the net of what I refunded. Where do I enter the refunds?
Thank you!
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You would deduct the payments as "Returns and Allowances" and as such they will be subtracted from your income on your schedule C. You will see an option for this when you enter your income in TurboTax as follows, when you click on Income you gave back:
You would deduct the payments as "Returns and Allowances" and as such they will be subtracted from your income on your schedule C. You will see an option for this when you enter your income in TurboTax as follows, when you click on Income you gave back:
Perfect! Thank you, exactly what I was looking for!
David
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