topic 1099-NEC and 1099-K reporting same income. Using Turbotax business. in Tax law changes

1099-NEC and 1099-K reporting same income. Using Turbotax business.

Mikemuck — Sat, 15 Feb 2025 15:53:00 GMT

I have a customer who paid me both with checks, then switched to a virtual cc. I used Square for the cc transaction. I received a 1099-NEC from my customer and a 1099-K from Square. There is some of the same income that is reported on both the 1099-NEC and the 1099-K. I'm using TurboTax business for my 1065. How's the best way to compensate for this double reporting as the IRS will think I have more income then I actually had.

Re: 1099-NEC and 1099-K reporting same income. Using Turbotax business.

MindyB — Sat, 15 Feb 2025 15:57:14 GMT

When you have a small business, you typically will not be using the 1099-K entry. Rather, the amounts from 1099-K will already be included in your sales. As you indicated, the 1099-NEC has reported the sales, so do not double-count them. If you would receive a letter from the IRS, you simply respond with a letter back that the amount from 1099-K was already included in your sales income.

See this article for more information: IRS Form 1099-K: What Online Business Owners Should Know

Re: 1099-NEC and 1099-K reporting same income. Using Turbotax business.

Mikemuck — Sat, 15 Feb 2025 16:04:53 GMT

Thanks for your reply. The 1099K from Square also contains income that is not reported through any of my 1099-NEC customers, but were charges directly with individuals. As the 1099-K gets reported to the IRS, won't this be a flag because the total gross sales I report will be less than the total of all the 1099-NEC's I received plus the 1099-K from Square which includes income some of which is in the 1099-NEC.

Re: 1099-NEC and 1099-K reporting same income. Using Turbotax business.

MindyB — Sat, 15 Feb 2025 16:16:57 GMT

No, you will not add the income twice. It is not expected that the 1099-K PLUS the 1099-NEC appear in gross sales.

However, it will be a red flag if your gross sales are less than the 1099-K alone. Your gross sales should also include income you made from individuals, regardless if they gave you a 1099-NEC.