What do I do if a 1099 K overlaps with a 1099 MISC?

[bridgetbakermojo]

I received payment through PayPal that showed up on my 1099-K. I also received a 1099-MISC from two clients that paid through PayPal. How do I report it without it duplicating?

[AnthonyC]

You only enter your total income regardless of the breakdown between the forms.  In TurboTax, income from a 1099-K is included in general income as the form itself is only used to report credit card and third party transactions.  However, there is a specific entry for income for a 1099-MISC.  So, if the two overlap, then you enter the 1099-MISC income in full and reduce your general income (1099K) by that amount.

Example:  You have $9,000 in income.  You have a 1099-MISC for $5,000, but you also have a 1099-K for $5,000 of which there is a $1,000 overlap with your 1099MISC income.  You would enter the 1099-MISC as reported for $5,000.  You would then enter only $4,000 under general income.  This way you are only reporting your true income of $9,000.

If you need navigation instructions for entering both of these incomes -

• Log into your account and click Take Me To My Return (you must click this before searching if you are not already in your account)
• Type “Schedule C" in the search box, top right of your screen, then click the magnifying glass
• Click the "jump to schedule c" ink in the search results.
• Follow the onscreen instructions - you will have to set up a Business profile if you already haven't
• You will arrive at the Your Business page where you will see the various income and expenses categories.

To enter business income for both of these items, follow the above instructions, then:

• On the Your Business page, click Start or Update next to Business Income
• Click update next to 1099-MISC and enter the income from this form
• Click update next to General Income and enter the remaining income (form 1099K minus amount already reported plus any other income you have)

[skyfall1]

hi, I am a bit confused about 1099K.  Most of my income is by credit card and all is reported to 1099K.  I entered all my 1099NEC ($1000) and 1099K($900).  My gross income is $1900. How do make this right? 

[LeticiaF1]

You must report all income you receive on your tax return. That includes Forms 1099-K, 1099-NEC, and 1099-MISC, and also any cash, property or goods you received that were not reported on a form.  If the amounts are duplicates then you can expense the duplicate amount on your Schedule C (Self-employed profit or loss), as Other miscellaneous expenses.  For the description, put in "1099 income reported twice" and then enter the amount of the duplicate income.  

If you would like more information about 1099K click here.  

[skyfall1]

Isn't that what makes total gross income double? I noticed the Schedule C total gross income reported with 1099K income. 

[KrisD15]

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.

In other words, if the 1099-NEC reports 1,000 and that was the total you made, but the 1099-K is reporting 900 (which is also reported on the 1099-NEC) enter them both, then enter 900 as an EXPENSE on Schedule C and name it "Income reported twice on Form 1099".

The Expense will subtract 900 from the 1,900 you reported to arrive at the proper 1,000 income. 

[skyfall1]

Thank you! I was looking for the clue to enter the 1099K number before line 7 Gross income. I wasn't sure if the gross income matters but the number doesn't make sense to me when my gross income shows $1900 when it is $1000. Yes, I can report duplicated 1099K income in the expanse section, and thank you for that verification.  

[joeltax]

I’m in the same situation and will do this method to cancel out the dual reported income. My only question is, since it’s a large amount of overlapping income would this not trigger an audit? And if it does how do I justify the offsetting expense when it technically isn’t an expense 

[ThomasM125]

The offsetting entry is justified as it allows you to adjust the reported income to the correct amount. Your only other option would be to report the correct gross income, but that would likely invite more IRS scrutiny than making the adjustment.

@joeltax 

[joeltax]

Ok great thanks. Just curious, is there a reason why this method seems to be preferred over just entering the duplicate amount on the 1040 line for “1099-k received in error”?

[ThomasM125]

In actuality, the ability to enter an adjustment to the amount reported on Form 1099-K to reflect duplicate reporting is a new option for 2024. It may be the preferred option going forward, but you may not see much on it in the forum as it is new.