I transferred money from my personal to business PayPal account many times to fund my business, and now my 1099k is showing that as taxable income. How do I deduct this

[jonathan22]

How do I show these transfers as not income? Do I add deductions on schedule c?

[MinhT1]

The transfers from your personal account are not income and are not be reported on your tax return.

In your case, do not enter your form 1099K on your tax return. Just keep it in your tax records with the proof of your transfers from your personal account.

On your tax return, just enter your business income (the part which is not transfers from your personal account and enter this income under Other self-employed income.

[jonathan22]

Thank you for your quick response. My concern is if I do that, the amount shown on my tax return for this is going to be less than what was reported on the 1099-k. Won’t that be a flag? 

[MinhT1]

Not necessarily. You just have to maintain records of your transfers from your personal account included in the 1099-K so that you can answer any question from the IRS.

[jonathan22]

Gotcha. I have not started my taxes yet, so this is all new to me having to deal with the 1099-k. I have done the schedule c for my business for the past ten years though, and income was always shown as sales from Shopify and sales from PayPal on different lines. As far as reporting the 1099-k, is it specifically all typed in line for line (like a w-2 is) or is it just another income line? Does it specifically get named 1099-k? Sorry if these questions are random, I’m just trying to get everything prepared and understood. 

[MinhT1]

Do not enter your 1099-K containing your transfers from your personal account on your tax return. Just enter the "real" sales as Other self-employed income in the business section of your tax return.

And keep the form 1099-K and proof of your transfers in your tax records.