How do I report Form 1099-K on my tax return

To report Form 1099-K on your tax return, you should use the information provided on the form to compute your gross receipts or sales. Here are the steps and considerations for different scenarios:

1. Business Income:
   • If you are self-employed or operate a business, report the gross receipts from Form 1099-K on Schedule C (Form 1040), Profit or Loss from Business. Include the gross amount from Box 1a of Form 1099-K as part of your business income.
   • Deduct any business-related expenses, such as fees, refunds, and other costs, to determine your net profit or loss.
2. Personal Items Sold at a Loss:
   • If you sold personal items at a loss, you can report and zero out the Form 1099-K gross payment amount on Schedule 1 (Form 1040), Additional Income and Adjustments to Income.
   • Enter the gross payment amount from Box 1a on Part I, Line 8z, with the description "Form 1099-K Personal Item Sold at a Loss."
   • Offset the gross payment amount on Part II, Line 24z, with the same description, resulting in a $0 net effect on your adjusted gross income (AGI).
3. Personal Items Sold at a Gain:
   • If you sold personal items at a gain, report the gain on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040), Capital Gains and Losses.
   • Calculate the gain as the difference between the sales price and your basis (purchase price) in the item.
4. Erroneous Form 1099-K:
   • If you received a Form 1099-K in error, report the gross payment amount on Schedule 1 (Form 1040), Part I, Line 8z, with the description "Form 1099-K received in error."
   • Offset the same amount on Part II, Line 24z, with the same description, resulting in a $0 net effect on your AGI.
5. Mixed Payments:
   • If the Form 1099-K includes both business and personal transactions, you need to separate the amounts and report them accordingly.
   • Business-related payments should be reported on Schedule C, while personal transactions should be handled as described above.
6. Crowdfunding and Donations:
   • If you received a Form 1099-K for crowdfunding or donations, determine if the amounts are taxable. Some crowdfunding amounts may be considered gifts and not taxable.
   • Report taxable amounts on the appropriate form or schedule based on the nature of the income.

Always ensure that you keep accurate records and documentation to support the amounts reported on your tax return. If you have any discrepancies or need further assistance, consult the IRS guidelines or a tax professional.

Sources:
Publication 334 (2023)
Publication 535 (2022)
FS-2023-27
Publication 5316 (11/2023)
FS-2024-3