1099-K and 1099-NEC Duplicate Income

[Nashville Newborn Photographer]

I'm a sole proprietor. I have clients who issued me 1099 NEC forms even though paid me via credit card (processed by Square). They just didn't know any better. I also received a 1099K from Square, of course, for this same income.

My understanding is that both forms (all the 1099-NEC's and the 1099-K) have been reported to the IRS, so they will think I made way more money than I actually did. I've been researching for HOURS, and so far I'm seeing the following conflicting advice, all from experts:

1. Enter all the income and use an offsetting expense for the duplicate amount.
2. Just report what your records show as actual income. 
3. Enter all the income and use an offsetting entry in income (negative number) for the duplicate amount.
4. Go back to the people who issued the 1099 NEC's in error and ask them to make corrections. (Not sure this is really do-able as there are 4 of them and I don't think they'll all agree to do that.)

This is going to be a hot topic as so many people are receiving 1099K's for the first time this year.

Please help! I have a large refund due and don't want it to be held up by the IRS due to incorrect reporting.

Thanks!

[MindyB]

Your solution is option #2. If you would happen to receive a letter from the IRS expecting more income to have been reported, you can respond with a letter back that the amount from 1099-K was already included in your sales income. 

When you have a small business, you typically won't be using the 1099-K entry. Rather, the amounts from 1099-K will already be included in your sales. You can enter the income reported on your Form 1099-K as self-employment income on Schedule C, the same as you would report cash, checks, etc.

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