Yes, it should be reported. However, it should not be taxed. The IRS receives copies of all government forms and reconciles that information to what is reported. Therefore, report the income and report the gift. It will result in $0 total.
- If you have a PayPal account for business use, then report the amount from your son as a refund or rebate in the income section to offset it.
- Report Form 1099-K as received in the COMMON INCOME section under Other self-employed income, includes 1099-K, cash, and checks
- Report the amount that was given to your son under LESS COMMON INCOME using Rebates and refunds, includes any income returned to customers, which will be a reduction of the income paid back.
- Otherwise, for personal expenses and reimbursement, report both the income and the expense (as an offsetting negative amount) as Other Miscellaneous Income.
- To do this in TurboTax Online, follow these steps:
- From the left menu, go to Federal and select the first tab, Wages & Income
- Add more income by scrolling down to the last option, Less Common Income, and Show more
- Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
- Choose the last option, Other reportable income and Start and Yes
- Enter the applicable description and amount and Continue
- First, enter Form 1099-K as received labeled something like Form 1099-K personal reimbursement.
- Next, enter an adjustment to reflect the personal reimbursement as a negative amount labeled something like Form 1099-K personal expense.
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