topic Re: 1099-k in Get your taxes done using TurboTax

Tax Year Prior to 2020: 1099-k

matbak — Tue, 23 May 2023 22:06:16 GMT

I received the refund of a security deposit for my old apartment and on PayPal which has issued me a 1099-k form. My understanding is that I have to file it, my point is: the transactions on the form is not technically "income", what is the correct way to deal with it?

Re: 1099-k

ColeenD3 — Mon, 17 Feb 2020 15:55:29 GMT

A returned security deposit is not income. It was your money to begin with. However, if the money was returned to you with interest, the interest would be taxable. (Some states require landlords to pay interest on security deposits.)

Since the only way to include it and then dispose of it as an exprense is by entering it on Schedule C, that is what you will need to do.

Re: 1099-k

matbak — Mon, 17 Feb 2020 18:54:19 GMT

Thank you very much Coleen!

What should I enter as "type of self-employment" on TurboTax?

Re: 1099-k

ThomasM125 — Mon, 17 Feb 2020 21:09:35 GMT

You do not need to report the refund, except the part that is interest. It is fully taxable and needs to be entered as a form 1099-INT entry in TurboTax as follows:

1. Go to the "Federal" section of TurboTax

2. Click on "Income and Expenses"

3. Find "Interest and Dividends"

4. Click on "Interest on a 1099-INT"

5. Click on the "Start" button or "Update" button next to it

6. Click on the option "I'll type it in myself"

7. Enter the name of the company that paid you and enter the interest amount received

Re: 1099-k

matbak — Tue, 18 Feb 2020 19:02:26 GMT

There is no interest on the money I have received and as mentioned the whole amount is two different refunds, one for a smoke detector and the other is the security deposit for my previous apartment. Any idea how I should go about it?

Re: 1099-k

VictorW9 — Tue, 18 Feb 2020 19:24:44 GMT

The IRS requires each payment settlement entity to send a form 1099-K to any individual or merchant entity for whom it has processed at least $20,000 worth of payments and/or at least or 200 transactions in the previous year. I am presuming the amount is at least $20,000.

You shouldn't have to report it to the IRS as you don't have a corresponding 1099 Misc as most other recipients of a 1099-K would. In any case it was a refund for a security deposit anyway.

Re: 1099-k

matbak — Tue, 18 Feb 2020 19:39:16 GMT

No Victor the amount is way less, $730.

Vermont and a few other states do require the 1099-k for total transactions above $600 apparently, and VT is where I reside.

So you are saying that since the 1099-k should be paired to a 1099-Misc, I am not to file the 1099-k?

Re: 1099-k

VictorW9 — Tue, 18 Feb 2020 19:55:15 GMT

Yes, you should't worry about filing the 1099-K. In fact, there is no where on the tax return that asks for a 1099-K information. The amount was a refund of your deposit and not income to you. It will mean that you are reporting money as income that basically was yours and have paid taxes on it already.

Re: 1099-k

matbak — Tue, 18 Feb 2020 19:57:38 GMT

Ultimately that's exactly why I was weirded out when I received the 1099-k, simply trying to be cautious since this 1099-k form has been sent to IRS and I do not want to incur in any issue for something of this nature.

Re: 1099-k

VictorW9 — Wed, 19 Feb 2020 19:04:33 GMT

@matbak you should be fine.

Re: 1099-k

matbak — Wed, 19 Feb 2020 22:41:29 GMT

A friend of a friend just told me, in regards of this matter, that I most likely have to put in a statement/explanation showing the refund nature of these transactions, and showing an expense of the same amount explaining what it is... I'm getting more and more confused lol