If you receive Form 1099-K for rent payments, how you report the income depends on why you received the money and whether it represents taxable rental income.
You may receive a Form 1099-K when rent is paid through a credit card, debit card, or payment app. The form reports the gross amount processed by the payment platform, but not all amounts reported on a 1099-K are necessarily taxable.
If You Own the Rental Property
If the payments are for a property you own and rent to others, the income is generally reported on Schedule E (Supplemental Income and Loss). Schedule E is the most common way to report rental income.
In some situations, rental income may be reported on Schedule C (Profit or Loss From Business), such as when the rental activity rises to the level of a trade or business. Follow your tax advisor's guidance if you're unsure which schedule applies to your situation.
Report the rental income in the appropriate rental or business income section of the program and keep records showing how the amount reported on Form 1099-K relates to the rent you received.
What If the 1099-K Was Issued for Roommate Rent Reimbursements?
A common situation occurs when one roommate collects rent from another roommate through a payment app and receives a Form 1099-K. If you are simply collecting your roommate's portion of the rent and you are not earning rental income, the IRS generally expects the Form 1099-K amount to be addressed on your return so it does not appear to be unreported income.
The process involves two entries:
Reporting the Amount Shown on the 1099-K
- Go to Federal
- Select Income
- Choose Select My Forms
- Select Less Common Income
- Choose Other Income
- Select Other Income from the description dropdown
- Enter the description: "1099-K issued in error"
- Enter the amount reported on the Form 1099-K
- Continue and save the entry
Offsetting the Amount
Next, enter an adjustment to remove the amount that should not be taxable.
- Go to Federal
- Select Deductions
- Choose Select My Forms
- Select Adjustments to Income
- Choose Other Adjustments
- Select Other Adjustments Not Listed Above
- Enter:
- Description: "1099-K received in error"
- Amount: The portion that should not be treated as income
If both entries are for the same amount, they will offset each other and result in no taxable income from those roommate reimbursement payments.
What If My 1099-K Includes Both Rental and Personal Payments?
Sometimes a Form 1099-K includes a mix of payments, such as:
- Taxable rental income
- Personal reimbursements from friends or roommates
- Other non-taxable personal transactions
In that case:
- Report only the taxable rental income in the appropriate rental or business section (Schedule E or Schedule C, as applicable).
- Separately report the non-taxable personal portion using the "1099-K issued in error" and offsetting adjustment method described above.
When making the adjustment:
- Use a description explaining why the amount is not taxable.
- Enter only the personal-payment portion of the Form 1099-K.
- Do not include the rental-income portion in the adjustment.
Keep Good Records
Form 1099-K reports gross payments processed through a payment platform. It does not tell the IRS whether payments were rental income, reimbursements, refunds, or personal transfers. That's why it's important to maintain supporting documentation, such as:
- Lease agreements
- Rent payment records
- Payment app transaction histories
- Bank statements
- Written roommate agreements
These records can help support the amounts reported on your return if questions arise later.
Before You File
Review your Form 1099-K carefully and determine which payments represent taxable rental income and which are personal transactions. Reporting rental income in the correct section while properly offsetting non-taxable payments can help ensure your return is accurate and prevent unnecessary IRS correspondence.
Additional Information
For additional information on 1099-K reporting, please visit our Knowledgebase.