Redundant income on 1099-K and 1099-NEC

[damianvines]

I have income on a 1099-K that is also reflected on a couple 1099-NEC's how / where do I adjust or offset this income so I'm not paying tax on it twice?

[JamesG1 · Accepted solution]

Do both forms report proceeds that will be reported as self-employment income reported on a Schedule C Profit or Loss From Business?

If this is the case, I would create the self-employment activity and report the IRS form 1099-NEC as income reported within the self-employment activity.

In TurboTax Premier Online, report self-employment income and expenses by following these directions:

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Click on the drop down arrow to the right of Self-employment.
• Click to the right of Self-employment income and expenses.
• At the screen Tell us the type of self-employment work you do, enter the answer and click Continue.
• Establish the self-employment activity and report the income and expense.

Report the IRS form 1099-K:

• At the screen Which type of income is your 1099-K for, report the IRS form 1099-K proceeds as Other.  
• Select This amount in box 1a is too high.... and report the full amount.
• The amount in box 1a should be reported on Schedule 1 Additional Income and Adjustments to Income as an amount reported to you on form 1099-K that was included in error.

Retain all paperwork with you income tax files should a tax authority contact you at a later time.

[damianvines]

Your explanation makes sense. I just want to re-iterate my concern, to make sure I understand... I'm not sure if I'm implying that the 1099-K is wrong. For instance, I have a 1099-NEC from a client that paid me $1,200 via CC, this payment was made through my merchant account at Stripe. I also received a 1099-K from Stripe that includes all of my transactions (income) for the year .... The dollar amount on this 1099-K  includes this payment from this customer... So if I add both forms as income I'm paying twice for this particular 1099-NEC. Should this client not have sent me a 1099-NEC, is that the real problem?

[JamesG1 · Accepted solution]

It is become more common that the same income is being reported on an IRS form 1099-NEC from one entity and on an IRS form 1099-K from a second entity.

Whether the issuer of the IRS form 1099-NEC was correct or not, we have to presume that the IRS form 1099-NEC was reported to the IRS and act accordingly.

Ideally, you are maintaining a record of your income and expense in an accounting system or in a spreadsheet and your record becomes the basis of what is reported to the IRS.

Then we react to these for 1099's as they show up.  Maintain a complete record so that you can respond to a tax authority at a later time.

[damianvines]

That's great advice thank you.