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This IRS publication supports @VolvoGirl's argument for correcting erroneous 1099-K income.
These thoughts come to mind.
- You want to report 1099-K income because the IRS is expecting to see the income reported on your Federal 1040 tax return.
- You should document fully what and why you are reporting what you report should a taxing authority ask questions several years later.
- You should only report the correct amount of income regardless of what is reported on the 1099-K forms. However, to accomplish this, you may have to 'reverse' an entry (or a portion of an entry) to accomplish this task if that is permissable under the tax code. As an example, you sold something for $100 but paid $20 for the item = $80 profit reported under a self-employment activity. You should pay tax on the $80 profit not the $100 gross income.
Is your 1099-K and 1099-NEC income being reported in a self-employment activity?
