Received a 1099k for my rental property showing security deposit as income. I am using schedule E to report income, do i need to show exact $ amount match for 1099k?

You have to report all income that is included in form 1099-K, but you can exclude items which are not income or are not taxable. You'll need to keep all necessary information on which items are excluded in your tax records, in case of inquiry by the IRS.

Please read this IRS document for more information.