Hey all, quick question for you that's been stumping me all afternoon and any help would be much appreciated!
My wife runs a small wedding floral business and we have chosen the accrual method as it's far easier to count the revenue by event as the event occurs and the actual service is completed. She does receive deposits for future events, but we don't count those as current year income because we're using the accrual method.
She's received a 1099-K from Square that is significantly more (around $25,000) than her taxable sales from using the accrual method. TurboTax does lets me enter the 1099-K and then manually offset the amount so the total is correct as shown below. Using this method, I'm entering the Box 1a from the 1099-K and then entering the difference between that number and her actual taxable sales in the second box. But will doing this trigger an audit?
We obviously want to do things correctly and enter the 1099-K, but only using the significantly higher total without that adjustment will result in overpayment now and much more difficult bookkeeping moving forward.
So my question is: do I just enter the 1099-K and manually adjust in that second box to match taxable sales? Or should I enter the taxable sales as general income and not enter the 1099-K at all?
Also I realize we probably should have hired a CPA and will probably do that from now on, but we're in too deep for this year.
TIA and I promise I'll keep making the GIFs everyone loves.
My wife runs a small wedding floral business and we have chosen the accrual method as it's far easier to count the revenue by event as the event occurs and the actual service is completed. She does receive deposits for future events, but we don't count those as current year income because we're using the accrual method.
She's received a 1099-K from Square that is significantly more (around $25,000) than her taxable sales from using the accrual method. TurboTax does lets me enter the 1099-K and then manually offset the amount so the total is correct as shown below. Using this method, I'm entering the Box 1a from the 1099-K and then entering the difference between that number and her actual taxable sales in the second box. But will doing this trigger an audit?
We obviously want to do things correctly and enter the 1099-K, but only using the significantly higher total without that adjustment will result in overpayment now and much more difficult bookkeeping moving forward.
So my question is: do I just enter the 1099-K and manually adjust in that second box to match taxable sales? Or should I enter the taxable sales as general income and not enter the 1099-K at all?
Also I realize we probably should have hired a CPA and will probably do that from now on, but we're in too deep for this year.
TIA and I promise I'll keep making the GIFs everyone loves.
