1099K and 1099-NEC Income

[LFT71]

All of my payments are received via PayPal so I get a 1099K from them; however, some of my clients also send me a 1099-NEC which is problematic as if I deduct from PayPal's 1099K the IRS thinks I'm not filing 100% of income. AND if I don't report the 1099-NECs, it's the same thing? How do I best report this without paying tax twice and inflating my overall income?

[VolvoGirl]

One answer I saw said....

If you get both a 1099NEC and 1099K,

When tax filing time comes, you must input both forms, however you can add an expense to offset the 1099-NEC income by selecting 'other miscellaneous expenses' and adding 'Form 1099-K income included in Form 1099-NEC reporting' as the description. 

[imnotrod]

If you search 1099-K in turbo tax, it plainly states "if you've already entered a 1099-NEC or 1099-MISC for this income, DO NOT ENTER IT AGAIN HERE"

You are not required to enter anything from the 1099-K.  Any income on it that is not reported on a 1099-NEC or MISC can be entered in the "general income" section for the self-employment/business income for the Schedule C.

Sorry this is months late, but advice to "create an expense" to off-set it is certainly NOT what you want to do... no matter what a "level 15" label for a responder means.  Plain bad advice from that user.  Accounting 101 anyone?

So, bottom line, don't create an expense that doesn't exist - ever, 

[JamesG1]

This IRS publication supports @VolvoGirl's argument for correcting erroneous 1099-K income.

These thoughts come to mind.

• You want to report 1099-K income because the IRS is expecting to see the income reported on your Federal 1040 tax return.
• You should document fully what and why you are reporting what you report should a taxing authority ask questions several years later.
• You should only report the correct amount of income regardless of what is reported on the 1099-K forms.  However, to accomplish this, you may have to 'reverse' an entry (or a portion of an entry) to accomplish this task if that is permissable under the tax code.  As an example, you sold something for $100 but paid $20 for the item = $80 profit reported under a self-employment activity. You should pay tax on the $80 profit not the $100 gross income.  

Is your 1099-K and 1099-NEC income being reported in a self-employment activity?

@LFT71