Business Income and 1099-K getting double counted - where to fix?

[GES_CA]

Under General Business Income, the note at the top of the page states "If you have income from sales or services that was not reported on Forms 1099-MISC, 1099-NEC, or 1099-G, enter it below.  You can also use the fields below to enter income reported to you on Form(s) 1099-K.  Learn More"

Clicking on Learn More gets "...You can use these fields to report the income from your 1099-K(s) for this business.  Note: Be sure to subtract out any amounts not considered income (i.e. cash backs) and only include income for this business before reporting the amount on your 1099-K."

So I entered the amounts from different income streams on the General Business Income page (e.g. $8000), and the 1099-K amount on the 1099-K page (e.g. $7800).  Fine.  On the main Business Income page it shows the amount from the General Business Income page as the General Income amount, and $0 for the 1099-K Income amount.  All good.  BUT...

On the following page (the main Business Income and Expenses page), it shows the combined numbers instead (e.g. $15800).  Going to the Forms View for that page (Schedule C form), it shows the General Business Income amount  for line 1a and the 1099-K amount on line 1d, and line 1e shows the combined amount (e.g. $15800) and that carries forward to line 1g.  The instruction for 1e is "Receipts or sales from line 1a, 1b, and 1c."  1b and 1c are blank, so it should only show the amount from 1a (e.g. $8000, NOT $15800), but appears to be including 1d in the calculation, so appears to be a bug in the program where it calculates and fills out Schedule C line1d. 

Unfortunately, it won't let me edit line 1e on the Schedule C form.  So need suggestion on how to fix Schedule C.

[AliciaP1]

TurboTax Home & Business needs to be edited and we are requesting that.  The main business income page should be showing $7,800 (in your example) on the 1099-K line.  Also, line 1e on the Schedule C in Forms mode should sum lines 1a thru 1d.

All your business income needs to be reported.  In your example, if the $8,000 of general business income does not include any of the $7,800 1099-K income, then your amount on line 1e ($15,800) is correct and you do not need to edit the amount.  If you have included the $7,800 in your general business income entry, you need to change the $8,000 to $200 so your total income will then be $8,000.

You can do a print preview of the Schedule C to see that line 1 is actually "Gross receipts or sales" on the form filed with the IRS.  To do this in TurboTax Home & Business you can follow these steps:

1. Within your tax return, click the Forms icon at the upper right of the screen
2. Scroll down the list on the left and click on your Schedule C
3. Use the Print button at the bottom of the preview screen and then Preview Print Copy

[GES_CA]

Hmm, Thank you.
Doesn't sound quite right to me, and will require manipulation that I would rather not do for transparency but sounds like cannot be avoided if your supposition is correct.

What you are saying is that the instruction for 1e, "Receipts or sales from line 1a, 1b, and 1c" is incorrect and should include 1d.  Yet, all the 1099-K is doing is reporting the aggregated credit card sales across multiple programs.  The credit card  amounts are already included in the actual sales numbers reported on the General Business Income page, as they have always been before the advent of the 1099-K.

That means that since the amount in 1a, which is composed of sales from 6 different coaching programs (which are listed separately with the individual sales for each on the General Business Income page), must be manipulated to remove the credit card sales of those programs reported on the 1099-K so as to not double count.  This amounts to stating that the only sales included in those numbers should be cash/checks, which is not how this has been done in the past.  While probably doable in Quickbooks, which is where the business accounts are kept, that does *not* seem correct to exclude credit card sales from the income page.  This is also contrary to the instructions on the General Business Income page, which, as noted before, states "You can also use the fields below to enter the income reported to you in Form(s) 1099-K."

Since the total amount of sales is *already* reported on the General Business Income page, I submit that the simpler solution is to *not* include the 1099-K amount, reported on line 1d of the Schedule C worksheet, as the instructions in TurboTax already state.    This also means the 1099-K amount would be greater than the listed total sales.  What TurboTax is doing (including the 1d amount on line 1e) in spite of the instructions for both the Schedule C workbook and on the General Business Income page seems incorrect to me, but if that is not going to be fixed, then I guess I will do what I have to do to get the actual income numbers to show correctly.  Ugh.

[PattiF · Accepted solution]

The 1099-K does not need to be entered separately into your tax return. The IRS is looking for the income that is reported on the 1099-K to be in your return. 

In some cases, like yours and others, as long as the numbers on  the 1099-K or a 1099-MISC are present on your tax return, the form does not need to be entered. Your simpler solution to not include the 1099-K is good. You are handling everything just fine if the total income you are reporting matches the total income shown on the Form 1099-K. This will not raise a red flag with the IRS.

@GES_CA 

[GES_CA]

Excellent.

I appreciate that suggestion and will follow it.  Indeed, the amount contained in the 1099-K is reflected in the amounts presents as income.  As I stated, I prefer to be transparent about where the income was earned (no matter whether is was paid for with cash, check, credit card, or electronically), which I already entered.  Entering the amount from the 1099-K was causing the earned income to be doubled (that would have been great if actually earned), but paying taxes on money that was not earned/received was the underlying issue.