Amending return after receiving a 1099-K from paypal for rebates

[Lily30]

I just filed a few days ago and my return was accepted. I thought I was done and wasn't expecting anymore forms to add to the return. Then I get an email from paypal saying my 1099-K form was ready. Apparently I received a little over $5000 in payments.

However, these aren't actual payments, they're rebates.

Now my question is how do I fill out a 1040-x to include the $5000ish from paypal and then write it as a personal loss to remove it as income? I'm probably going to print out the 1040-x and mail it in with the 1099-k form, I just don't know how to fill it out and if there's another schedule form I need to send.

[JamesG1]

If your return has been transmitted and rejected by the IRS, you can correct your tax return and re-transmit.

If your return has been transmitted and accepted by the IRS, you will have to amend your Federal 1040 tax return.  However, before amending your tax return, do not enter the return and do not make any changes.

Amended tax returns will not be available around the middle of February. See forms availability here.

If you used TurboTax Online, log in to your account and select Amend a return that was filed and accepted.

If you used the CD/download product, sign back into your return and select Amend a filed return. 

See also this TurboTax Help.

It sounds like you are reporting a capital loss for a personal item sale.  If so, in TurboTax Online, follow these directions.  

• Down the left side of the screen, click on Tax Home.
• Click on the down arrow to the right of Review.
• Click on the blue band labeled Review.
• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Scroll down to Other Common Income click on the dropdown menu.
• Click Start/Revisit to the right of Form 1099-K.
• At the screen Did you get a 1099-K?, select Yes.
• At the screen How would you like to upload your 1099-K? click Type it in myself. 
• At the screen Which type of income is your 1099-K for, select the button for Personal item sales.  Click Continue.
• At the screen Let's get the info from your 1099-K, enter the information.     
• If necessary, select the box "This amount in box 1a is too high or includes some personal transactions."
• Click Continue.
• At the screen Personal Item Sales, you are told that further information will need to be entered.  Learn More provides detailed information for the next steps.  Click Continue.
• At the screen Your 1099-K summary, notice that the income relates to ‘Personal Items’.  Click Done.
• At the screen Your income and expenses, scroll down to Investments and Savings (1099-B, 1099-K….).  Click the down arrow.
• To the right of Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B), select Start/Revisit.
• At this screen, you will be asked to Review the Personal item sales (1099-K).  Click Review.
• At the screen Now, enter one sale…., answer questions about the personal item sale.  Click Continue.
• At the screen, Let us know if any of these situations apply to this sale, sales expenses may be recorded.

The entry will be reported:

• on Schedule D of the Federal 1040 tax return, and 
• on line 7 of the Federal 1040 tax return.

Capital loss for a personal item sale reports $0 capital gain on line 7 of the Federal 1040 tax return.

[Lily30]

Thanks for all the information but how would it be reported on a 1040-x form?

It's a "loss" because the 1099-k is money back from multiple rebates throughout the year

[KeshaH]

If the rebates are cashback rewards, they are considered discounts on purchases and not generally taxable. 

However, if the rebates are business related you would need to reduce your related expenses which will increase your net income and impact your tax liability. Alternatively, you can report the rebates as other income if it's not feasible to determine which expenses the rebates apply to.

If the rebates are not business related, you can report the amount from the 1099-K as other income and then include another line that shows the same amount as a negative to zero it out. 

First, set up the amended return within TurboTax. Note that the 1040-X will not be available within the program until mid-February.

To report the 1099-K:

- within your account, navigate to Federal, then Wages & Income

- scroll to Other Common Income

- choose Start next to 1099-K

- on the screen that asks if you received a 1099-K, select Yes

- when asked which type of income the 1099-K is for, choose Other

- enter the details from the 1099-K

- click Continue

To zero out the income:

- navigate back to Wages & Income

- scroll to Less Common Income

- choose Miscellaneous Income, 1099-A, 1099-C

- click Start next to Other Reportable Income

- On the screen that asks if you have any other taxable income, select Yes

- For the description, enter 1099-K Cash Back Rewards. In the amount box, enter the negative amount.

- Click Continue.

@Lily30