If you received a Form 1099-K that includes money that shouldn't be taxable, such as personal gifts or reimbursements from friends or family, the first step is to request a corrected form from the issuer. A corrected 1099-K is the best way to resolve reporting errors before you file your tax return.
Important: Personal payments that aren't for goods or services generally aren't taxable income and shouldn't be reported on Form 1099-K.
How to Get a Corrected 1099-K
Contact the payment network or third-party settlement organization that issued the form and explain the error. Ask them to review the transactions and issue a corrected Form 1099-K if appropriate.
Examples of payments that generally should not be reported as taxable income include:
- Gifts from friends or family
- Shared household expense reimbursements
- Repayments of personal loans
- Other personal, non-business transactions
What If I Can't Get the 1099-K Corrected?
If you're unable to obtain a corrected Form 1099-K, you can report the amount on your federal return and then make an offsetting adjustment for the non-taxable portion.
Report the Income
Follow these steps in the program:
- Go to Federal
- Select Income (Select my forms)
- Select Less Common Income
- Choose Other Income
- From the description drop-down menu, select Other Income
- Enter 1099-K received in error as the description
- Enter the amount reported on the Form 1099-K
- Continue to save your entry
Remove the Non-Taxable Amount
After entering the income, make an adjustment to remove the amount that should not be taxed.
- Go to Federal
- Select Deductions (Select my forms)
- Select Adjustments to Income
- Choose Other Adjustments
- Select Other Adjustments Not Listed Above
- Enter the following information:
- Description: 1099-K received in error
- Amount: The portion of the Form 1099-K that should not be treated as taxable income
This adjustment helps ensure that non-taxable personal payments are not included in your taxable income.
Keep Records for Your Tax Return
If you need to report and offset an incorrect 1099-K, keep documentation showing why the payments weren't taxable. Helpful records may include:
- Payment app transaction histories
- Bank statements
- Screenshots or payment notes identifying reimbursements or gifts
- Communications showing the purpose of the payment
Good records can help support your return if the IRS requests additional information.
Additional Information About Form 1099-K
For the most current IRS guidance on corrected Forms 1099-K and reporting errors, review the IRS resources related to Form 1099-K reporting requirements and corrections.
You may also find it helpful to review additional 1099-K articles and resources within the Knowledgebase for situations involving personal payments, business income, and payment app reporting requirements.