1099k

[samk]

Hi, my client pay me through Square for services I provide, they will send me the 1099 for the payments I received and Square will send me 1099 for the same payments, so how do I avoid getting taxed twice for the same payment??

[Donnie-M]

1099's are only used to report where money went, they in and of themselves do not mean you owe any taxes.  This is where using a tax professional or tax attorney for your business is crucial.  I am actually glad you asked this question, as many businesses will face this same dilemma.

First of all, the 1099k from square has always been a thing and only shows you took in money via credit cards for said amount.  It is up to you to file your return and show whether this revenue was income or not.  Every business has expenses, and if you have 2 forms reporting the same money coming in, that will be part of your income tax return or corporate tax return.

Here is some more advice from Turbotax: "The IRS has directed that any 1099-MISC payments that are reported on a 1099-K should be reported on the latter form only, and that a 1099-MISC need not be issued. However, in practice, many companies are still providing 1099-MISC forms. To avoid double taxation, keep detailed sales records and deduct any payments also reported on the 1099-MISC form from the 1099-K payment before reporting them on your tax return - and be prepared to explain the deductions to the IRS."

This is where, your records with square will come in EXTRA important.  If you got a credit card payment you have that transaction receipt inside your square dashboard, and you will have your 1099k from square...so match those up to the 1099-misc..and BAM!  You have a detailed reporting of where the money went and that it was reported twice and your deduction is valid. 

I'd really hate to not be using square and having to keep up with sub par reporting from some third party fly by night CC processor!  Do you know how easy it is to lose a piece of paper?  Some days I impress myself, and other days I leave my car keys in the refrigerator!

Hope this helps.