If you received a Form 1099-K for payments that were not taxable income, such as gifts from family members, shared expenses reimbursed by friends, or other personal transactions, don't ignore it. The IRS also received a copy of that form and may expect to see it reported on your tax return.
Your first step should be to contact the payment processor or issuer that sent the Form 1099-K and request a corrected form.
Contact the Issuer for a Corrected 1099-K
The issuer's information appears in the upper-left corner of Form 1099-K.
Take these steps:
- Contact the issuer as soon as possible and explain why the Form 1099-K is incorrect.
- Request a corrected Form 1099-K.
- Keep copies of all emails, letters, chat transcripts, or other communications for your records.
Having documentation can help support your position if the IRS ever asks about the discrepancy.
What If the Issuer Won't Correct the Form?
Sometimes an issuer may refuse to issue a corrected Form 1099-K. If that happens, you should still report the amount shown on the form and then make an adjustment on your tax return to remove any amount that should not be treated as taxable income.
This approach helps ensure the income reported to the IRS matches the information they received while also showing why the amount should not be taxed.
How to Report an Incorrect 1099-K in Our Program
Follow these steps to report the Form 1099-K amount:
- Go to Federal.
- Select Income.
- Choose My Forms.
- Select Less Common Income.
- Choose Other Income.
- From the Other Income Description dropdown menu, select Other Income.
- Enter the description: "1099-K received in error".
- Enter the amount reported on Form 1099-K.
- Continue and save your entry.
How to Remove the Non-Taxable Amount
Next, enter an offsetting adjustment to show that the reported amount should not be taxed.
- Go to Federal.
- Select Deductions.
- Choose My Forms.
- Select Adjustments to Income.
- Select Other Adjustments.
- Choose Other adjustments not listed above.
- Enter:
- Description: "1099-K received in error"
- Amount: The portion of the Form 1099-K that should not be considered taxable income
Save the entry when finished.
By reporting the amount and then entering the adjustment, you can show both the IRS-reported payment information and the reason the income should not be included in your taxable income.
How Do I Dispute a 1099-K?
If you believe your Form 1099-K is incorrect:
- Contact the issuer and request a corrected form.
- Keep records of all communications and supporting documentation.
- If a corrected form is not provided, report the amount shown and make the appropriate adjustment on your tax return to reflect the correct taxable income.
Common Examples of Non-Taxable Payments
You may have received a Form 1099-K in error if the payments were for:
- Gifts from family members or friends
- Reimbursements for shared expenses
- Personal transfers between accounts you own
- Repayment of money someone borrowed from you
- Other non-business, non-income transactions
These types of payments generally are not taxable simply because they were processed through a payment app or online platform.
Key Takeaway
If you receive a Form 1099-K that reports payments that were not income, try to obtain a corrected form first. If a correction is unavailable, report the amount and enter an offsetting adjustment on your return so the IRS can see why the payment should not be taxed.