Hi All,
I’m wondering how to appropriately report a 1099K error using TurboTax, based on the new IRS guidance for 1099K errors recently issued here: https://www.irs.gov/businesses/understanding-your-form-1099-k
Additional Background:
I recently received a 1099K from Venmo for an early 2022 transaction of $2,000 which was incorrectly marked as a payment for goods and services. I have previously communicated with Venmo, and corrected the classification. I still received a 1099K.
My initial understanding was that this transaction should be non-taxable, and so is not required to be reported. (ie this post: https://ttlc.intuit.com/community/taxes/discussion/1099-k-issued-in-error/00/2634236/amp)
But, after reading the new TurboTax resources and IRS guidance, my understanding is that we should be using the following:
“Part I - Line 8 - Other Income - Form 1099-K Received in Error
and
Part II - Line 24z - Other Adjustments - Form 1099-K Received in Error”
On schedule 1 to report and subsequently reverse the income on our returns.
How should we present the transaction through TurboTax?
Right now I have the transaction flowing as follows:
Receipt: Other Income > 1099K > Other > Other (can include any taxable income not reported elsewhere on your return) of $2k
Offset: Less Common Income > Miscellaneous Income, 1099-A, 1099-C > Other Reportable Income > Description “Form 1099-K Received in Error” of -$2k
Alternatively, should we consider presenting both receipt and offset under Less Common Income > Miscellaneous Income, 1099-A, 1099-C > Other Reportable Income > Description “Form 1099-K Received in Error” for receipt and offset of $2k and -$2k, respectively. Noting that we’re not prompted to attach the 1099K using the alternative method.
Thank you!
