I received 1099k through cashback/rebates. Do I still have to report to IRS?

[dankwak93]

I found an article that says

The IRS requires each payment settlement entity to send you a Form 1099-K by January 31 if it has processed at least $20,000 worth of payments and at least 200 transactions for you in the previous year.

But you still could receive 1099-Ks from some PSEs even when the form isn’t required by the IRS. Many PSEs send 1099-Ks to all their vendors, even if they’ve only processed a handful of transactions and fall well short of the $20,000 threshold.

If this is true, does that mean I don't have to report to IRS?

[AmyC]

You received a form 1099-K and you are saying that none of it is related to any income or business earned. If you are receiving cashback due to a business, it is reportable.  Please see Understanding Your Form 1099-K | Internal Revenue Service.

Edited 1/27/2022 (7:07 PST)

[RBBrittain]

You are supposed to report ALL income to the IRS, even if less than the reporting threshold for the 1099 it's reported on. If you ignore a 1099, odds are the IRS will catch it and send you a letter treating it as income -- often without the benefit of exclusions, deductions, etc. that would have been available if you had reported it.

Also, I believe the reporting threshold for the 1099-K was lowered this year to $600 regardless of the number of transactions. The definition of "payment settlement entity" was also broadened to include business payments handled thru PayPal, Venmo, etc.

[dankwak93]

I don’t own a business. When I opened my PayPal account I chose business account so I can get a debit card. Maybe that’s why PayPal sent 1099k when I received cash back from stores. So do I need to report it then? 

[dankwak93]

Then what do I report it as? Because the funds I received are not income, but cash back rewards. I tried putting information on my taxes but I can only input on self employment section.

[AmyC]

 @RBBrittain is correct. You must report and then explain - subtract. If you truly had no business or earned income, you will report the 1099K and then report a negative amount under other income. 

 Follow these steps:

1. Go to Federal section
2. Scroll down to Less Common Income
3. Select Miscellaneous Income, 1099-A, 1099-C selection
4. Select Other Reportable Income,  START
5. Any other taxable income, select YES
6. Enter description, 1099k not taxable
7. Enter the NEGATIVE amount in the box next to your name.
8. Click Continue

[Kyleterp]

@AmyC I’m in the same situation. I saw your response and I’m just trying to clarify. So what you’re saying is I have to say report example number of $1000( live in lower threshold state)  

and then report it again as minus -1000. 

How would I report the 1099k as to what income 

[ColeenD3]

This advice is not across-the-board advice. You can't simply zero out every income that is received on Form 1099-K. You have to select the circumstance that applies to you.

There is no one answer to the 1099-K problem. Everyone's situation is a little different. However, if you fail to enter income of any type, other than what is expressly excluded, you will hear from the IRS. A very important aspect is whether you sell the item/s for a gain or a loss.

There are so many permutations to this. These are just some of the questions regarding 1099-K.

1) Some of the things I sold pertained to a business, but some did not.

You have to separate the sales that were actually business vs those that were not. You have a hybrid situation.

 2) None was business income. I sold old things I had laying around the house. This is not a business. You must include the 1099-K but you can zero out the income since you had no profit.

3) I did this so it's kind of a business but not really. Yes. It's a business. Report on Schedule C.

4) I bought and resold but it was a one-off type of thing.  You had a sporadic activity. It is other income.

The IRS simply states this.

What should I do with this information?

It is important that your business books and records reflect your business income, including any amounts that may be reported on Form 1099-K. You must report on your income tax return all income you receive from your business. In most cases, your business income will be in the form of cash, checks, and debit/credit card payments. Business income is generally referred to as gross receipts on income tax returns. Therefore, you should consider the amounts shown on Form 1099-K, along with all other amounts received, when calculating gross receipts for your income tax return.

1099-K

[Kyleterp]

Hello @ColeenD3  I didn’t sell anything or operate a business. I had cash back rebates from Ibotta and apps transferred the rebates into PayPal. Rebates aren’t considered to be income according to the IRS but PayPal gave me a 1099k for it. How can I minimize it?

[ColeenD3]

Please see this answer from @PattiF.

This can be reported as the sale of items not associated with a business so this won't be considered as self-employment income

In order to do that you can either report it as investment income or other miscellaneous income. Make sure to include expenses of the sales and the original cost of the items.

For reporting Form 1009-K for personal items sold not associated with a trade or business, you can report this as Miscellaneous income.

• From the left menu, go to Federal and select the first tab, Wages & Income
• Add more income by scrolling down to the last option, Less Common Income, and Show more
• Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
• Choose the last option, Other reportable income and Start and Yes
• Enter the applicable description and amount and Continue
  • First, enter Form 1099-K as received. It is essential that the full amount be entered.
  • Next, enter an adjustment as a negative number to reflect the cost of these items and the sales expenses  (but not more than the sales price. You can't produce a loss.)

[LeonardS]

To report your 1099-K from PayPay and not have it included as income follow these steps:

1. Log in to your TurboTax account if it is not open.
2. Select the Wages & Income tab.
3. Scroll down to Less common income click Show more.
4. On the page Let's Work on Any Miscellaneous Income click on Other reportable income.
5. On the page Any Other Taxable Income?  select yes.
6. On the page, Other Taxable Income enter PayPal 1099-K Personal for the description and the amount.
7. Select continue and answer No on the next page.

Next, you will have to offset your PayPay 1099-K.  Follow these steps to offset your 1099-K:

1. Log in to your TurboTax account if it is not open.
2. Select the Wages & Income tab.
3. Scroll down to Less common income click Show more.
4. On the page Let's Work on Any Miscellaneous Income click on Other reportable income.
5. On the page Any Other Taxable Income?  select yes.
6. On the page, Other Taxable Income enter PayPay 1099-K Personal for the description and the  amount as a -number for example  -1,200.
7. Select continue and answer No on the next page.

This process will report the income form the 1099-K in the first entry and then "back-it-out"  as personal in the second entry and will not be included as income on your tax return.