Wrong amount on 1099 form will this cause a problem?

Forum|Forum|4 years ago
April 24, 2022
12 replies
82 views

My business got a 1099-K form from our credit card processing company. It shows $1,024,000 in revenue for 2021. But we only had $524,000 in revenue. My bank statement deposits add up to the $524,000. Assuming I cannot get a hold of anyone at the cc company to fix this, what should I do? If we report $524,000 income on the tax return the IRS computers will see the $1,024,000 on the 1099 form. I don't want to get one of those auto generated letters from the IRS 3 years from now saying we owe tax on the phanton $500k revenue. What should I do?

LudwigVan_fan

Alumni - Champ

First and foremost, get in touch with the CC processing company. Be persistent and get a corrected 1099-K issued.

If that cannot be done, when you file your return, include the amount on the 1099-K, then take a deduction to arrive at the corrected amount. Attache an explanation as to the reason for the deduction.

You could put the amount in gross receipts, then a deduction in returns and allowances.

My opinion is that without a corrected 1099-K, there will be an inquiry from IRS.

**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**

SweetieJean

Alumni - Champ

Also see:

Understanding Your Form 1099-K | Internal Revenue Service (irs.gov)

SweetieJean

Alumni - Champ

Exactly $500,000 in phantom revenue strikes me as too convenient. Any chance that your account was compromised? You might want to check your credit reports.