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Intuit Biz e-filing closure on December 21 at 6:00PM PST. Select your product for more Hot topics. Lacerte | ProConnect | ProSeries
Intuit Biz e-filing closure on December 21 at 6:00PM PST. Select your product for more Hot topics. Lacerte | ProConnect | ProSeries
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1099K
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DavidaD
Level 1
02-21-2024
01:34 PM
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Hi. My client is a loan company and received a 1099K. The amount included both principal and interest. Only the interest is revenue. Does anyone know how to address this?
4 Comments 4
rbynaker
Level 13
02-21-2024
02:03 PM
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In my experience, the IRS does not know what to do with 1099-Ks. Their computers do have some sort of algorithm to match them and generate CP notices. The problem with 1099-K is that the numbers are often meaningless and include things like principal (as you pointed out), sales tax, tips, rental income, capital asset sales, etc. Things that are actual revenue might be reported on Sch 1, B, C, D, E, F, 4797, etc.
My approach would be to attach a free-form statement to the return explaining the situation and possibly reconciling the amounts reported on the return to the 1099-K total. Yours might be easy:
Interest received reported on Sch C $10,000
Principal payments received on Loans $5,000
Total per Form 1099-K from Venmo (etc.) $15,000
Other folks will tell you to run it in and out of Sch C. To each his/her own (but this approach doesn't work for me in VA since then the gross receipts will get reported on a VA return and a VA locality will be expecting the taxpayer to pay a gross receipts tax with their business license renewal.)
Rick
IRonMaN
Level 15
02-21-2024
02:09 PM
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Personally, I would just file the return correctly and not worry about the 1099K. If by some chance they receive a notice somewhere down the road, deal with it at that time.
Slava Ukraini!
TaxGuyBill
Level 15
02-21-2024
05:12 PM
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@rbynaker wrote:
In my experience, the IRS does not know what to do with 1099-Ks.
Maybe that is why they keep extending the deadline for the $600 threshold (although I think you said your state already has that). It isn't being extended for the issuers of the 1099-K or for the recipients, it is to give the IRS time to figure out what to do with them. 😂
rbynaker
Level 13
02-21-2024
06:09 PM
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@TaxGuyBill wrote:
@rbynaker wrote:
In my experience, the IRS does not know what to do with 1099-Ks.
Maybe that is why they keep extending the deadline for the $600 threshold (although I think you said your state already has that). It isn't being extended for the issuers of the 1099-K or for the recipients, it is to give the IRS time to figure out what to do with them. 😂
I don't disagree. I haven't bothered to look to see by what authority they get to defy Congress on this, mostly because I think it's a good idea for them to do so. I'm sure $600 made sense however many decades ago but it's too low of a bar today.
