A security deposit should not be included in your income when you receive it if you plan to return it to your tenant at the end of the lease. But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year.
If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Include it in your income when you receive it.
Follow this post from Expert JohnW152 for the steps on how to report Form 1099-K in TurboTax Business, including an adjustment (if needed) for the security deposit.
See this TurboTax article for more information: TurboTax: Rental Real Estate and Taxes - Security Deposits
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