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

[Mikemuck]

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.

[MindyB]

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 

[Mikemuck]

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.  

[MindyB]

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.