1099-K problem

Hi,
A friend of mine is asking my advice but it’s out of my wheelhouse.
He rents a house for a business, using VRBO for booking renters. They sent him a 1099-K. And his management company sent him a 1099-MISC. The management company says the 1099-K will not be reported to the IRS, but they appear to be wrong. From the IRS website:

“The Form 1099-K, Payment Card and Third Party Network Transactions, is an information return that reports the gross amount of reportable transactions for the calendar year to the IRS.”

So his income is being reported double to the IRS as far as I can tell.
Any thoughts, advice, or knowledge about this?

Thanks,
RB

https://ttlc.intuit.com/community/taxes/discussion/if-i-have…

You should always report all income filed with the IRS (i.e., all 1099s) on your return. (The IRS does have a matching program to ensure that all 1099s reported to them are included on the recipient’s income tax returns. ) This does not mean that you will have to pay tax on the same income twice (see below).

After you have recorded both 1099s in the income section of your schedule C, you are going to back one of them out by treating it as an expense.

In the Expenses portion of your Schedule C (Self-employed profit or loss), you should add Other miscellaneous expenses. For the description, put in “1099 income reported twice” and then enter the amount of the duplicate income.

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he management company says the 1099-K will not be reported to the IRS, but they appear to be wrong.
.
.
.
So his income is being reported double to the IRS as far as I can tell.
Any thoughts, advice, or knowledge about this?

Yes, the management company is wrong. 1099-Ks are reported to the IRS. 1099-Ks are issued by third party payment processors. Any income that is reported through a third party payment processor (like VRBO, PayPal, Amazon, Square, etc.) should not also be reported on a 1099-MISC. If he can’t get his management company to re-issue a correct 1099-MISC accounting for only the income that was paid to him directly by the management company after they collected it from the renters, or was otherwise not paid through a third party payment processor, then I would suggest that he enter an expense of “duplicate income reported on 1099-K and 1099-MISC” and be prepared to show detailed reconciliation for that justification.

He should not just ignore one of the forms.

And then he should look for a different management company.

AJ

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Thanks very much for your help, both of you!
RB