1099-NEC, 1099-K Duplicated Income

• show total revenue of 51,000
• deduct under other expenses 1,000, label something like "1099 NEC INCOME ALREADY INCLUDED IN TOTAL REVENUE ABOVE"

It's not Duplicated Income.

Let's review the basics:

1099 forms are Informational.

1099-K is Money Flowing. There is a requirement for a Payment Settlement Entity (PayPal, eBay) to report the person had a level of activity that necessitates a 1099-K. This happens, for instance, if you sell your own Engagement ring and are paid by PayPal.

1099-NEC is a customer reporting that they paid someone, in the course of business, an amount that meets the reporting requirement. To be able to take it as business expense, they reported it to the IRS, and the IRS expects that person on the 1099-NEC to be reporting their income. Not this Amount.

A customer who pays through any PSE or by Credit Card doesn't also need to issue a 1099-NEC, but they don't all know this. That 1099-NEC could be from a different client, as well. The reporting could have been because your client got paid by Cash, for instance. And, even if no one pays your client $600 or more (so there is never a 1099-NEC issued), your Client still is supposed to report all of their business income.

So, the $50k is money Moving.

Your client should be giving you their business financial info for the Sched C.

These are not the same thing.

I agree with qbteachmt....  1099s and 1099Ks aren't necessarily indicative of total income.  Could a client only be paid through a Payment Settlement Entity - possible but probably not likely.      

Everyone that thinks the IRS cross-checking system won't raise a red flag if NEC's plus K's add up to more than gross receipts reported on the tax return, raise your hand, please.

I'm with Jim. If it adds up to more than actual gross receipts, prevent a headache for your client and you, and do the IRS a favor, by somehow reconciling this on the tax return to prevent red flags.