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I pay the full rent to our landlord and my friend sends me his share. When using Venmo, he accidentally ticked the 'goods and services' option which marks it as a commercial transaction. He sent me $725 which is over the $600 IRS limit.

I spoke with Venmo and reversed the transaction. Will it still generate the 1099-K at the end of the year?

rsn
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1 Answers1

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If you reversed the transaction then it would probably not generate the 1099. Even if it does, you'll need to report it on your 1040 as misc income and then back out again as reimbursement as it is, and zero it out. You don't pay taxes because someone generated 1099, you pay taxes because you have taxable income - which in this case you don't.

littleadv
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    For specific instructions (if needed) https://www.irs.gov/newsroom/actions-to-take-if-a-form-1099-k-is-received-in-error-or-with-incorrect-information – dave_thompson_085 Nov 16 '23 at 02:14
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    I'm not familiar with US tax laws but would something like this really trigger some type of taxation? – Nelson Nov 17 '23 at 05:39
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    as I say in the answer, the substance doesn't change, so no taxes would be triggered just because of a wrong button click. Extra paperwork - yes, possible. – littleadv Nov 17 '23 at 05:42
  • @dave_thompson_085: That link looks like something to put into an answer -- maybe an edit to this one?. – Nat Nov 18 '23 at 03:32