It is possible that the income will be reported to the state associated with the mailing address on file at PayPal.
You need to report the income based on where you lived or worked when it was earned. If you didn't live or work in that state when the income was earned, you don't need to report it in that state. If the state department of revenue inquires about it, just have evidence supporting the fact that the reporting on the 1099 form is incorrect. @informedNB
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