Received 1099-K for credit card transactions/payments. These amounts include sales tax. They also do not accurately reflect the amounts that were deposited into my bank account. Their fees were deducted from the payments. What was actually paid to me was incorrectly stated because of their fees and the fact that they included sales tax on each of the transactions.
I'd already entered my sales receipts into QBooks so when I entered this amount for 1099-K, it added the two together. This means all credit card sales were duplicated. I know how to fix the issue with their credit card fees simply by entering the total fees as an expense on Schedule C. However, I don't intend to pay income tax on sales tax that was paid to our State Comptroller.
My solution would be not to include the 1099-K at all on my tax return. I saw this same solution mentioned in another discussion - not to list the 1099-K into Turbotax. However, they went on to say that as long as the Gross Receipts or Sales total on Schedule C was the same as what the 1099-K form shows, it would not cause a Red Flag. That makes no sense to me.
The amounts included on this 1099-K are strictly the credit card sales receipts and do not include the cash and check sales. So my Gross Receipts & Sales amount on Line 1 of Schedule C will reflect a different total than shown on 1099-K. Also, my Sales Receipts amount does not include sales tax. These two numbers, Gross Sales Receipts and 1099-K totals will never be the same. Will excluding the 1099-K form from my tax return cause a Red Flag if I've included all of my sales receipts which include all cash, check and credit card sales? Please reply ASAP so that I can complete my tax return. Thank you for your help!!!!
