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I'm a bit confused about this whole 1099-K situation. If I receive one but the money isn't taxable (like in your case where it's just reimbursements), do I still need to report it somewhere on my taxes? Or can I just ignore it entirely? CashApp Taxes is giving me a headache too.
You absolutely cannot ignore it! The IRS receives a copy of every 1099-K, and their systems automatically match them to your tax ID. If you don't account for it somehow on your return, you'll likely get a CP2000 notice (automated underreporting notice) which is basically the IRS saying "hey, we think you didn't report all your income." The correct approach is to report it and then exclude it with an explanation. Most tax software (including CashApp Taxes) has a way to indicate the money isn't taxable income. This satisfies the reporting requirement while ensuring you don't pay taxes on money that isn't actually income.
Thanks for explaining! That makes sense about the IRS matching the forms. So better to report it with the explanation than to trigger an automatic flag in their system. I'll make sure to include it in CashApp Taxes and check that box saying it's not taxable income.
Has anyone actually received a correction to an incorrect 1099-K? Venmo sent me one claiming I had $7,800 in "goods and services" when it was literally just my parents sending me help with rent. I disputed it with Venmo months ago and they just keep saying "we're looking into it" but never actually fix anything.
I managed to get Square to issue a corrected 1099-K last year, but it took persistence. The key was escalating beyond the first-level support. I had to specifically request to speak with their tax reporting department. It took about 6 weeks, but they eventually issued a corrected form. In the meantime, I filed my taxes as others here suggested - reporting the 1099-K but indicating the amounts weren't taxable. That way if the correction never came, my taxes were still accurate.
One thing nobody's mentioned is that you could set up a proper 501(c) organization for your tournament. I did this years ago for our community fundraiser. Yes there's some paperwork involved but then all donations go directly to the org, not through your personal account, and you avoid this whole issue. Plus donors get proper tax receipts they can use for their own deductions.
Isn't setting up a 501(c) really expensive and complicated though? I heard you need lawyers and stuff.
It's not as bad as people think. For a small organization, filing for 501(c)(3) status using Form 1023-EZ is relatively straightforward if your annual gross receipts are under $50,000. The filing fee is around $275. You don't necessarily need lawyers, though having someone with experience look over your application can help. There are also online services that guide you through the process for a few hundred dollars. The main requirements are having proper bylaws, a board structure, and clear charitable purpose. Once established, annual maintenance is just filing a simple Form 990-N if you stay under the $50,000 threshold.
I'm confused by some of the advice here. Couldn't you just have each golfer make their check directly to the charity instead of passing through your account? That way they get the deduction if they want it, and you avoid this whole issue.
Have you considered looking into what's called a "landlord contribution agreement"? My brother was in a similar situation where he was upgrading our parents' property where he lived. Their tax guy set up a formal written agreement stating that he was making capital improvements in lieu of some portion of rent, which helped clarify the tax treatment. In his case, the parents (as owners) were able to claim the energy credits, while he got to reduce his taxable rental payments. Everyone benefited and it was all properly documented in case of audit. Might be worth exploring that angle if your family is willing to formalize the arrangement.
That's really interesting! I hadn't heard of a landlord contribution agreement before. Did your brother's arrangement require monthly payments to still be made, or was it entirely offset by the improvements? My situation is more informal - I help with utilities and maintenance but don't pay a set "rent" amount.
The arrangement didn't require full elimination of rent payments. They structured it so a portion of what would have been market-rate rent was offset by the documented improvement costs. There was still some payment happening to establish a legitimate landlord-tenant relationship, but significantly reduced. The key was having everything in writing with fair market values established for both the rent and the improvements. They also took photos before/after and kept all receipts. Their tax professional basically said the most important thing is showing this is a legitimate business arrangement, not just a family helping each other out informally. The more formal documentation you have, the better position you're in if questions come up.
Make sure you're looking at the right credits too! There are different rules for different energy credits. The Residential Clean Energy Credit (for solar, wind, geothermal, battery storage) has different rules than the Energy Efficient Home Improvement Credit (for insulation, doors, windows, heat pumps). For the Residential Clean Energy Credit you get 30% back and it's available through 2032. For the Home Improvement one it's 30% too but has annual limits and specific requirements for each type of improvement. Either way tho the basic rule is you gotta be the owner to claim these. Sorry but that's just how the tax code is written. The best solution is prolly what others suggested - work out some ownership arrangement with your family, even if it's just 10% ownership. That would let you claim at least part of the credits.
I'm a tax preparer, and I strongly recommend against trying to compare multiple software programs without understanding the nuances of tax law. Different software may ask questions differently or interpret certain scenarios based on how you input information. If there are significant differences between the refund amounts, it's not necessarily because one is "wrong" - it could be that you entered information differently or one program makes certain assumptions another doesn't. For truly free options, try the IRS Free File program partners, which includes options like TaxSlayer, 1040Now, etc. Many offer truly free filing if your AGI is under certain thresholds (usually $73,000).
If I find different refund amounts between software, how do I know which one is correct? Should I just go with the one that gives me the bigger refund?
You should never simply choose the software that gives you the bigger refund without understanding why there's a difference. A larger refund might be incorrect and could potentially trigger an audit. If you find different results, dig into the actual tax forms and compare them line by line to see where the differences occur. The most common discrepancies happen with education credits, business expense categorizations, or retirement contribution deductions. When you find the specific lines that differ, research that particular tax topic or consult with a professional about that specific issue.
I do this every year! Here's what I've learned: TurboTax: You can go all the way to the end without paying. Just don't click "File" and you'll see your refund amount for free. H&R Block: Same thing! Complete everything but don't submit. Their free version is actually pretty good for basic returns. One weird thing I noticed - sometimes they give different amounts because of how they word certain questions. Last year H&R Block phrased a question about my student loan interest in a way that made me answer differently than in TurboTax, which caused a $200 difference in my refund!
Emma Wilson
Has anyone used TurboTax for this situation? I'm trying to figure out if they ask the right questions to handle a dependent with SSI/SSDI correctly.
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QuantumLeap
ā¢I used TurboTax last year to claim my father-in-law who gets SSDI. It asks you to enter their income including social security benefits. The key is making sure you know exactly how much is SSDI vs SSI because you'll need to enter the SSDI amount when it asks for Social Security benefits. TurboTax then correctly applies the gross income test.
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Emma Wilson
ā¢Thanks for sharing your experience! Did TurboTax specifically ask you to separate SSI from SSDI, or did you just need to know that information in advance?
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Malik Johnson
Quick tip from someone who went through an audit on this exact issue: keep DETAILED records of all expenses you pay for your grandmother. The IRS wanted documentation showing I provided more than 50% support. Save receipts for rent/mortgage, utilities, groceries, medical expenses, etc. Calculate the total cost of support and what portion you paid vs. what came from her benefits.
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Isabella Santos
ā¢Did you have to go into an IRS office or was it handled by mail? I'm terrified of audits.
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