If you received a 1099-K for items that should not be considered income, such as gifts or reimbursements from friends or family, take the following steps.
- Contact the issuer immediately to have a corrected 1099-K issued. The issuer information is located on the top left corner of the 1099-K.
- Keep all correspondence between you and the issuer for your records.
What if the issuer won't correct the 1099-K?
The IRS has received information that the issuer has sent you a 1099-K. They are expecting to find the information on your tax return. You will need to report the income and the correction on your return. To show the payment is incorrect, complete the following steps.
Reporting the income:
Follow these steps within our program to report the income.
- Federal Section
- Select My Forms
- Less common Income
- Other Income Not Reported Elsewhere
- Choose Other Income
- Enter the description of the income (why are you deducting it) as "Form 1099-K received in error, $XXX" and include the dollar amount.
- Enter the amount of the income you are reporting from Form 1099-K
- Continue to save your entry
Subtracting the Income:
Subtracting the income will be a duplicate entry with a small change.
If you are reporting the subtraction immediately after making the income entry, select '+Add an Other Income Item' and continue with steps 7-9. Otherwise, follow the steps below to make your subtraction.
- Federal Section
- Adjustments to Income
- Other Adjustments
- Other Adjustments Not Listed Above
- Enter the Description as 1099-K received in error
- Enter the amount that should not be considered income on the 1099-K
These two entries will allow you to report the 1099-K on the return AND show the IRS that the income is not taxable.
For additional information on 1099-K reporting, please visit our Knowledgebase.