The way you report it on your tax return will depend on the payment's purpose.
Why did I get a 1099-K?
Per the IRS, "Form 1099-K is a report of payments you got during the year from:
- Credit, debit, or stored value cards such as gift cards (payment cards)
- Payment apps or online marketplaces (third-party payment networks)
Third-party payment networks must file Form 1099-K with the IRS and provide a copy to you when the gross payment amount is more than $5,000. Form 1099-K should not report gifts or reimbursement of personal expenses you received from friends and family."
If you receive a 1099-K, the IRS requires this income to be reported as income on the Schedule C. For more information about the 1099-K, please click here.
To enter 1099-K income on a Schedule C within the program, go to:
- Federal Section
- Income (Select my forms)
- Profit or Loss from a Business - Schedule C
- Income
- Gross Receipts or Sales (Including Income Reported on Form 1099-K)
If your 1099-K is incorrect and included personal items that may be non-taxable, it is suggested that you contact the issuer to have a corrected Form 1099-K issued.
If your 1099-K includes some personal payments, such as gifts from family or reimbursements from friends, and you are unable to obtain a corrected form, you can subtract that personal amount out of the Schedule C income and use the following pathway to enter the information that was included in error.
- Federal
- Income (Select my forms)
- 1099-K
Be sure to keep accurate records regarding the personal amounts that are being subtracted to have available if requested by the IRS.