Square 1099-K for Payment from Family

[TripleShot99]

I use Square to receive monthly payments from my child for Cell Phone service on our family plan. Now I am receiving a 1099-K. Do I need to report this? 

[DaveF1006]

Yes you should report this but then zero out the income after reporting. You should have never used Square to collect your monthly payments from your child for his/her use for a cellphone but you can report this as business income in your return 9assuming you have a business) and then subtract it out as a cellphone expense if you are using Turbo Tax self-employed.

1. Sign in to TurboTax.
2. Click on the orange Take me to my return button. Go to Income and Expenses. Then go to self-employment income>self employment and expenses>start
3. After your business profile is entered, you will reach a screen that says Let's enter the income for your XXX work.
4. Make the selection where it says Other self-employed income, includes 1099-K, cash, and checks.
5. Next screen should say Tell us about the other self-employed income for your XXX work. Here write 1099K for cellphone payments received from my child and then the amount.
6. Finish out the income section, 
7. When you begin recording the expenses, you will record the cellphone expense under communications.  Follow through the section and put in your child's payments made to you plus any other cellphone expense you may have incurred.
8. Note: I assumed you had a business and that is why you used Square.  if you don't have a business, then there is completely different method to report this. let us know if this is the case.

[TripleShot99]

Thank you for they the excellent detailed information and instructions. However, I do not have a business. This was just a simple way of them pay us using their debit card since they live far away.

I would appreciate the other instructions you mentioned.

[DawnC]

If this was a repayment for personal expenses paid, you do not have to report it at all.   Keep detailed records in case the IRS sends an inquiry.   You have no tax liability for repayments of your family members' personal expenses.  

If you want to report it, you can choose to enter the amount from the 1099-K under the Miscellaneous Income section (last section within the Less Common Income section) with a negative entry to offset it, so you are not taxed for it.   Use the Other Reportable Income line to enter the amount they reimbursed you and the same section to enter the negative offsetting entry.