1099-k question

[mcbreck]

IRS website says if you received a 1099-k and it is not taxable, you should report it on Schedule 1 line 8z and then back it out on 24z as non taxable. In Drake it appears you have to enter it manually on the lines? There isn't a 1099-k form? When I go to 99k, it says it is only to be used for State purposes and will not be entered on the federal return.

 

Is this all correct? I'm anticipating a lot of people receiving 1099-k forms this year for non-taxable events but maybe I'm wrong.

[TexTaxToo]

3 hours ago, mcbreck said:

IRS website says if you received a 1099-k and it is not taxable, you should report it on Schedule 1 line 8z and then back it out on 24z as non taxable.

Where did you see this on the IRS website?  I don't see it in the FAQs:

https://www.irs.gov/payments/form-1099-k-frequently-asked-questions-individuals

[Medlin Software, Dennis]

Receiving a non needed 1099 is not a new issue.  Been happening for decades.  The issue remains being prepared to show why it was not taxable, or where the taxable amount was reported.  Sounds like the k version of the form may be something the IRS plans on reconciling?

[Catherine]

1099-k that's not taxable is usually reported to the states (for reference, not for taxation), not the feds. There's an entry field in the general state tab.

[mcbreck]

On 12/17/2022 at 7:29 PM, Catherine said:

1099-k that's not taxable is usually reported to the states (for reference, not for taxation), not the feds. There's an entry field in the general state tab.

The 1099-k can be taxable and the IRS has a copy of the form so how do you just ignore outlining it on the fed 1040? Individuals could be getting 2-3 of these easily for personal transactions or business transactions and I'm thinking the IRS instituted this reporting requirement because they want to receive an explanation.

 

H&R Block has this:

Personal transactions – You’ll report the amounts form your 1099-K on Schedule 1 (Form 1040), line 8z. You should include the Form 1099-K’s issuer’s name and Employee Identification Number (EIN). On the same form on line 24z, you’ll subtract the same amount. Again, you should include the issuer’s name and EIN.

IRS has this:

Form 1099-K includes the gross amount of all reportable payment transactions. You will receive a Form 1099-K from each payment settlement entity from which you received payments in settlement of reportable payment transactions. A reportable payment transaction is defined as a payment card transaction or a third-party network transaction.

 

Intuit has this on their site:

If you receive a 1099-K with reportable transactions, you will need to claim those amounts on your tax return to avoid receiving a CP2000 notice from the IRS after filing.

However, if you are sure the amounts are not taxable income to you, you can create an offsetting "other income" entry as a negative amount, and "Gifts reported on 1099-K" in the description line.

[Lynn EA USTCP in Louisiana]

For non-taxable personal transactions I would not put any info on the tax return.  However, I would include form 8275 disclosure statement explaining the facts and circumstances.  Client would be advised to expect IRS correspondence.

[Catherine]

What I usually do is enter the full amount of the 1099-K as "eBay payments" (or whatever), and on the next line back off $1 less, as "personal items sold no profit" so the detail transmits. $1 of taxable income won't change anyone's tax return situation overall.