Income in 1099-NEC that is also reported in 1099-K. How to remove duplicate income?

[fjleontax]

This is a common question that has been asked over the years and I have read the previous topics but I still have questions, since Turbotax changes each year.

So I have a 1099K that includes some transactions that I am also reporting in a 1099-NEC.

I am aware I file the full amount of the 1099-NEC, no questions there. The problem is how do I enter the amount in the 1099K.

I can see there's a new field called "This amount in box 1a is too high or includes some personal transactions". However, I am unsure whether to use this field or not. The help item does not mention being used to handle duplicate transactions, and even says that I should contact the payer to get this fixed. For this reason, I am assuming I should not use this field.

Previous answers say I should enter a negative income to "cancel" it out. Some say this works, some say it doesn't. Other posts say to put this as an expense, which I do not believe it's accurate. So what should I do?

The payer for the 1099-k is paypal and basically i received a payment from an entity using paypal that was a bit over 600 which triggered the 1099-nec

[KrisD15]

Yes, when you enter the 1099-K select the type of income, on the following screen use the option of "This amount in box 1a is too high or includes some personal transactions"

Enter the amount that should not be on the 1099-K

I'm sure people get tripped up on this- you are entering what should not be reported, but you enter as a POSITIVE number. (It could be tempting to enter as a negative since it is being subtracted off) but you are entering an amount that doesn't apply to your tax return. 

The section for entry of Form 109-K is new since the filing requirements for Form 1099-K has changed this year and I assume will continue to change for the next few years as the IRS figures out the best way to get the form reported. 

[fjleontax]

if this new field is intended for me to use to remove "duplicate" income, why doesn't the help topic say so?

also, when i enter the amount in this field, i still see the 1099k in the full amount, so unsure how i could confirm that this is lowering my taxable income somewhere.

i want to ask turbotax officially about this, but not willing to spend more on a "live" product just to get the privilege of asking for their confusing help topic

[JamesG1]

IRS form 1099-K income that was included in error or for personal items sold is reported on Schedule 1 Additional Income and Adjustments to Income.

In TurboTax Online, you can print or view your full tax returns prior to filing after you have paid for the software.

• View the entries down the left side of the screen at Tax Tools.
• Select Print Center.
• Select Print, save or preview this year's return.

In TurboTax Desktop, select Forms and view Schedule 1.

[adam420]

Hi @KrisD15 -- I've searched the internet about this topic and am seeing you are saying two different ways for handling this. Which is the correct way to handle this?

On another post regarding this same topic on 2/14/24 you say:  If the same income is reported on two different forms, the 1099-NEC and 1099-K , enter them both but then SUBTRACT THE DUPLICATED AMOUNT  as an expense on your Schedule C and name it "Income reported twice on Form 1099".

Now on this post, 3 weeks ago, I see you are saying: When you enter the 1099-K select the type of income, on the following screen use the option of "This amount in box 1a is too high or includes some personal transactions" Enter the amount that should not be on the 1099-K

Can someone please clarify what to do if you have income on 1099-NEC that also showed up 1099-Ks?

For example, I got 1099NEC for 54441.25. This payer was paying through PayPal & Square Inc so I also received 1099K from PayPal for 15076.75 and 1099K Square Inc for 40716.50.  Although, 1352 of 15076.75 1099k Paypal was not accounted for in the 54441.25 1099NEC, because it was from a different payer and I didnt get a separate 1099NEC from that other payer. What do I do? Thanks!

[JamesG1]

All of the options outlined by @KrisD15 are valid and useful depending upon the facts and circumstances within a tax return.

In your case, will these revenue streams all flow to a self-employment activity reported on your 1040 income tax return on Schedule C Profit and Loss From Business?

If so, what will be the total revenue reported in the self-employment activity?  If the total revenue to be reported will be $120,000, then, within the self-employment activity you might enter:

• the IRS form 1099-NEC for $54,441, 
• the IRS form 1099-K for $15,076, and 
• the IRS form 1099-K for $40,716

Then you could report the difference under Other self-employed income, includes cash and checks.  See here.

If the total revenue to be reported within the self-employment activity is less than the total of the three IRS forms listed above, you may establish an Other miscellaneous expense to report the difference.

So, if the three IRS forms listed above total $110,233 and the self-employment revenue that should be reported is $110,000, you may establish an Other miscellaneous expense to report the difference of $233.

In either case, you have acknowledged the IRS forms and correctly reported your 2024 income.

@adam420 

[adam420]

Guys after looking at reddit, I learned that the payer who issued the 1099NEC did so in error. Because IRS says:

Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC or Form 1099-NEC.

Wild that I had to learn this myself and these Turbo Tax experts don't mention anything about this... I don't have time to try to get 1099-NEC payer to try to cancel my 1099-NEC to be 0, so I guess I have to report all the 1099NECs, 1099Ks, and then make a huge miscellaneous expense in schedule C with the description: "1099-NEC received in error, income already reported on 1099-Ks" or maybe "Erroneous 1099-NEC received"

[joeltax]

I’m in the same situation. I think I’ll ultimately report it all and do the cancel out expense (mine is also a big amount like yours which makes me uneasy to make such a large expense). 

frustrating that last year I found on the IRS website it says “if a 1099-k duplicates other reporting forms” to correct it in the other income section. But now for this year it only says if it duplicates another 1099-k. 

[MonikaK1]

If the same income is reported to you on two different tax forms, one of which is a 1099-K:

Yes, it's acceptable to handle the situation using these steps:

1. report the amount on the other form (such as 1099-NEC or 1099-MISC) and let it stand
2. enter the 1099-K 
3. make an additional entry to back out the amount reported on 1099-K, stating in the explanation field that it's already reported on the other form. 

That way, the IRS information return matching programs will find both 1099s and not assume one is missing, which could lead to a correspondence audit.

See also this TurboTax tips article and this IRS webpage for more information.

@joeltax