You are correct - enter the adjustment in the same interview as the payments, but as a negative number.
To enter the adjustment:
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Go to Less Common Income, Miscellaneous Income and Other reportable income. Enter "Lawsuit settlement" in the Search Box and Select "Jump to lawsuit settlement" "to get to this screen ("Lawsuit settlement" is just an effective search term to get to this interview screen)
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Continue to the screen "Other Taxable Income". Enter the description as "1099-K Costs" and the amount as a negative number. Entering "-$ 6205" here will offset the receipts reported on the Form 1099-K. These are NOT wages.
A corresponding negative amount will be entered on line 8 of Schedule 1.
