I tend to agree with the interpretations that the Sales Tax included in your 1099-K should not be included in income. My CPA (in Pennsylvania) told me the same, that I shouldn't include Sales Tax anywhere in income.
The question is how to do it in Turbotax. I decided to go to Forms View and just reduce the total gross amount on my imported 1099-K. I don't believe this number appears on your taxes anywhere other than as part of your grand total of Income Line 1 on Schedule C, so that seems to be the cleanest way to remove the Sales Tax from the Income total.
I initially checked the box in TT after importing the 1099-K that said the box 1a should be adjusted. But I noticed this showed up at the very top of Schedule 1 under "For 2024, enter the amount reported to you on Form(s) 1099-K that was included in error or for personal items sold at a loss" and that doesn't seem right. It's not an error in the 1099-K.
I also think handling it as an "Other Expense" on Schedule C Line 27a/48 is a viable alternative. Maybe even better as you can describe it as "Sales Tax included on 1099-K". This is how I am handling the Credit Card charges included in 1099-K, on Line 48 with "Credit Card processing fees from Square 1099-K". I might just change to this method before I file as I like that I can include an explanation.
I hope TurboTax will add something in the future that makes it clear what the best way to handle this is.
