I received a 1099-K from my payment processor Shopify for my gross payment. I also received a 1099-NEC from a customer who's transaction was part of the 1099-K I got. If I enter the amount of the 1099-K and the amount on the 1099-NEC into turbo tax, its actually showing more income then what I actually made since its counting the customers payment in both the 1099-K and 1099-NEC. How do I enter this info so I am not double taxed? If I deduct the 1099-NEC amount from my 1099-K, the IRS will see the wrong amount for 1099-K as it will be lower than whats on the 1099-K. However I am supposed to enter the 1099-NEC in turbo tax as well. How do I do this?
You should enter the 1099-NEC as the amount reported to you. When you report the amount on the 1099-K, you don't actually enter that form in TurboTax, just the amount from which you will deduct the double reported income that is reported on the 1099-NEC form.
The IRS knows that the amount reported on the 1099-K form is often reported another the 1099 form, so it won't create a problem if you report a lesser amount for it.
Thanks so much, since I have cash receipts too which I report in the same section as the 1099-K. Couldn't I eventually just deduct the 1099-NEC out of the cash receipts and keep the 1099-K as is? Either way it comes out the same. Which way would be better or doesn't it matter?
Thanks
It is more important to report the 1099-NEC in full and adjust the 1099-K information to report the rest of your income.
The 1099-NEC may have withholding amounts and the IRS matches the filed 1099-NEC to your return in its review process. There are a number of reasons the 1099-K may not match exactly so that form is less scrutinized.
Thanks, the IRS does not see each individual 1099-K on my tax return right? I list each one separate but when looking at my .pdf file of last years return, that info doesn't even show up, only the total amount of all income.