Get your taxes done using TurboTax

You want to report the income to let the IRS know that you acknowledge the IRS form 1099-K income.  

Then you reverse the income out with an explanation.  I would report the IRS form 1099-K as Hobby income and would follow these steps.

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• You may need to click Add more income.
• Scroll down to Other Common Income and click on the dropdown menu.
• Click Start to the right of Form 1099K.
• At the screen Did you get a 1099-K? click Yes.
• At the screen How would you like to upload your 1099-K? click Type it in myself. 
• At the screen Which type of income is your 1099-K for?, select the button for Hobby income.  Click Continue.
• At the screen Let’s get the info from your 1099-K, enter the information.
• Click This amount in box 1a is to high or includes some personal transactions.
• In the box enter the same amount to be reversed out.
• Click Continue.
• At the screen Your 1099-K summary, notice that the income relates to ‘Hobby’.  Click Done.

The entry will be reported:

• on line 8z of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

There may also be a separate statement that reflects the income and the reversal of the income.