How to enter an erroneous 1099-K?

[jazzki73]

I've looked on the forums here and have yet to find the answer to this question (even though it may exist and I haven't seen it yet).  The problem I am having is that my wife had an erroneous 1099-K sent to her for a PayPal transaction that was REVERSED. When she contacted PayPal to re-issue a corrected 1099-K form, they refused. She was instructed to use the directions from IRS which state:

"If a corrected 1099-K cannot be obtained

If taxpayers can't get a corrected Form 1099-K, report the information on Schedule 1 (Form 1040), Additional Income and Adjustments to Income, as follows:

• Part I – Line 8z – Other Income – Form 1099-K Received in Error.
• Part II – Line 24z – Other Adjustments - Form 1099-K Received in Error.

The net effect of these two adjustments on adjusted gross income would be $0."

The PROBLEM is, TurboTax Deluxe 2023 which we are using, does not allow us to enter this. I cannot manually enter it either. TurboTax does not allow me to edit the 1040 Schedule 1 form. The erroneous transaction is $800 ($200 over the limit for reporting). How do I account for this without increasing my liability on my taxes?

Thank you in advance.

[DaveF1006]

Yes, there is a way to enter this.

1. Log into your account
2. Select Wages and income
3. Less Common income
4. Miscellaneous Income, 1099-A, 1099>start
5. Scroll to the bottom of the page to Other Reportable Income
6. Other taxable income, answer yes
7. Then give a brief description of the income and the amount listed. Call this 1099K Income Received in Error and report the income amount.

Once this appears in a summary screen, click on the Add Miscellaneous Income Item and then call it Reverse 1099K Income Received in Error and report the same income amount with a minus sign in front of the amount. The net result will appear on a form that is titled Other Income Statement and reported on Schedule 1, line 8.

[jazzki73]

If I read you correctly, this is TurboTax online? I am using the TurboTax Deluxe 2023 download on my computer locally. I'm not sure this would work the same?

[PaulaM]

Yes, It works the same way in TurboTax Deluxe desktop as DaveF1006 previously described. Navigate to the Other Reportable Income section and make two entries. One to report the form as is and the second to report the amount in the negative. The form will be reported but the effect will be netted to zero. 

[jazzki73]

Thank you both so much. Greatly appreciated!!