1099 NEC and 1099 K reporting the same income

[MikeKallet]

I have a customer who I invoice, and they elected to pay through a credit card.  They provided me with the cc information that I was to use a third party network to charge.  I used Square to charge that credit card.   I received a 1099 NEC from my customer that included this transaction as well as a 1099 K from Square that also included this transaction.  So from a tax reporting perspective to the IRS, this income transaction is on both.   Is it the company that needs to correct this, or Square as the acting third party network, as I'm concerned that the IRS will think I have more income than I actually had.  Thanks

[Candlestore]

@MikeKallet ;

I have problems understanding why you are using their Credit Card Processor (3rd Party) for you to get Paid?  

Do you have an account with the 3rd party to receive your Funds?

How does your Customer have a 1099 NEC showing the charge that you never processed through that credit card processor?

This is all sounding very suspicous to me.  

Customer can choose how they pay, Cash, Credit Card or other means you accept, but have not heard a customer ask to use XYZ card processor for me to get paid when I am not receiving funds from XYZ or heard of them.  

So ask whoever sent you  the 1099 NEC to show proof of this charge as you accedentally used your card processor and have the confirmed transaction in your system with the processor you used.

[MikeKallet]

My customer is a major corporation.  They moved from EFT payments to a virtual credit card, i.e. they send me information so I can charge using a third party, i.e. Square or Stripe.  I do business with this customer, along with others, and they send me 1099-NEC.  However in this particular case, this company switched payment methods mid 2024, so some of the 1099 NEC is from their EFT payments, and (mistakenly) they also included the virtual credit card payment that I used Square for.  So the double reporting is on their 1099 NEC and Square's 1099-K.  I've asked the company to send me a corrected 1099 NEC as it should have not included the cc transaction from Square.    As I said, they are a huge company, so not sure I'll get a revised one.   I'll just have to keep a clear record so if the IRS inquires about the discrepancy of the income I report vs the 1099's they receive, I can explain it.   I imagine, tens of thousands of companies will have to deal with this, as the new 1099-K processes are not completely implemented in organizations.

[Candlestore]

@MikeKallet;

Best other thing would be to talk to your Accountant and show them this issue and show that it only appears for you on your Records as 1 transaction.  I wonder if the Large company sent the money to their 3rd party, but since you sent Payment through Square, they still have a balance for that amount.  

You may want  to contact the Major company through your Contact point, and let them know of your error using their older payment type of going through Square by mistake instead of using their new payment method.  Then explain that you are showing a double payment for their one charge for their purchase.  Maybe by talking to your contact they might be able to resolve this for you instead of just asking a generic help center contact for that company.

Since you did process the Payment through Square, Squares 1099 K would be correct.  The issue is that you received a 1099 NEC that you did not process, which would go back to them to show the corrected 1099 NEC.  

[MayaP · Accepted solution]

Hey @MikeKallet  – Thanks for reaching out. I know tax reporting can get a little complicated. If this payment was processed through Square, then as @Candlestore mentioned, it should be correct. I’m also curious about why there are different forms of payments involved. For this issue, I highly recommend speaking with an accountant or tax professional who can provide the best advice on how to resolve this. If you need any further assistance, don’t hesitate to reach out and make sure to tag me so I can see your reply. I hope everything works out!

[MayaP]

Thanks for your help @Candlestore. You brought up some great points.