The problem is that you might also receive other 1099s for this same income.
Here’s what you should do if you receive a 1099-K to avoid this expensive mistake.
Read more:Best Self-Employment Tax Software
Why am I receiving a 1099-K?
In 2022, the IRS announced it would lower this reporting threshold.
This threshold is set to go down to $2,500 next year and $600 in 2026.
Companies are required to issue these forms for any work over $600 that you perform in a year.
This can be confusing to navigate, especially if you’reearning freelance incomefor the first time.
Even some professional tax preparers may accidentally enter both income sources and accidentally double-report your income.
This could severely impact your refund, how much you owe or your eligibility for various tax credits.
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Risks of misreporting 1099-K income
Multiple issues could arise from more people receiving 1099-Ks this year.
Entering your revenue this way is the best way to avoid any double-reporting issues.
Schedule C is also where you deduct all of your eligible business expenses.
Your tax software will guide you throughcommon business deductions for self-employed individuals.
The dollar amount that they report on the 1099-K is the gross total.
What if I receive a 1099-K by mistake?
If this occurs, drop a line to the payment processor and request a corrected 1099-K. Keep records of your transactions and what they were for in case the IRS asks questions.
Help, I accidentally reported a 1099-K. What should I do?
Your tax return software should also be able to generate this form for you.
File the 1040-X electronically for the fastest processing.
Always double-check your tax return
The new 1099-K rollout could cause confusion whenfiling your taxes.
double-check you don’t accidentally double-report income detailed on two different tax forms.
It’s on you to catch any mistakes to ensure you don’t accidentally pay the IRS too much.
More tax filing advice:
