I received a 1099-k for security deposits received. How do I enter it into my 1065 using TurboTax Business desktop? Security deposits are not taxable.

[MD331]

I received a 1099-K and need to report it into my 1065 return. The 1099-k was for security deposits collected through RentRedi/Propay and is not taxable unless used for damages when the tenant moves out in spring of 2024.

I need to report the 1099-K and then reduce the income so it is not taxed as such. 

Do I report it as "other" income and reduce my collected rent reported by that amount?

Seems that there should be a line where it is entered that specifically earmarks it as "1099-k received" and "adjustment" so my IRS friends see I properly recorded it.

[JohnW152]

Since, as you say, security deposits aren't taxable, enter your Form 1099-K information in TurboTax Online like this:

1. If you don’t see 2022 TAXES in the left pane, select the dropdown to the right of Income & Expenses on the Hi, let’s keep working on your taxes! page and then select Let’s get started, Pick up where you left off, or Review/Edit. 
   • Otherwise, in the left pane, select Wages & Income
2. Scroll down and select the Show more dropdown to the right of Other Common Income
3. Select  Start or Revisit to the right of Form 1099-K
4. Answer  Yes to the question, Did you get a 1099-K?  (If you've already entered a Form 1099-K, select the Add a 1099-K box)
5. Select  Type it in myself on the How would you like to enter your 1099-K? page, then select Continue
6. On the  Choose which type of income your 1099-K is for page, select the bullet next to Other (can include any taxable income not reported elsewhere on your return) OR if the entire amount is incorrect
7. On the  Let's get the info from your 1099-K screen, enter all information from your 1099-K
8. Select the box next to This amount in box 1a is too high or includes some personal transactions
9. Enter the Form 1099-K amount related to the security deposit (all, if appropriate), then select Continue
10. Select  Continue on the Your 1099-K summary page

See Are security deposits taxable? In the TurboTax article Rental Real Estate and Taxes for  relevant information.

[MD331]

Thanks for your reply. I am using TurboTax Desktop Business not TurboTax online. Filing a 1065 under my multimember LLC. 

Found a section under "Rental income" called "other income" then "all other income" where you type a description and an amount. This category is not earmarked for 1099-K's.

Any other thoughts?

[JohnW152]

You're on the right track.  There's actually a particular screen in Desktop Business that will accommodate you, and it's 1099-K specific.

Under FEDERAL TAXES ---> Wages & Income:

1. Scroll down to Rental Properties and Royalties and select Start or Update to the right of Rental Properties and Royalties (Sch E)
2. Proceed through the screens, entering or editing information as needed, until you come to the Review Your (Business Address) Rental Summary
3. Select Start or Update to the right of Rental Income
4. On the Rental Income screen, select Start or Update to the right of Business income reported to you on Form(s) 1099-K
5. Select Add a 1099-K
6. On the Let's get the info from your 1099-K screen, enter your Form 1099-K information.
7. Check the box to the left of This amount in box 1a is incorrect
8. Select the bullet next to Box 1a is overstated or contains personal use amounts.  Enter the Form 1099-K amount related to the security deposit (all, if appropriate), then select Continue

[MD331]

I followed you through the rents and royalties and added the amount in the box then continued through the screens. There is a note to add any 1099-k to my rental income manually into the rent when I edit the income but I cannot get a link to:

"On the Rental Income screen, select Start or Update to the right of Business income reported to you on Form(s) 1099-K  

Without it I cannot continue to add the details of the 1099-k

[MD331]

A follow up from my last reply...

I switched to the "forms" section and looked up the sch-k page. My entry shows under line 7 Royalties.

I then went down to line 11 "other income(loss) and added a type "I" with description "nontaxable security deposits reported on 1099-K" then entered a negative number to offset the Royalty amount.  Still looking for a place to enter details of the 1099-K?