You need to enter all of your earnings on your 1040 and your state return. There is no minimum threshold for reporting on your tax return. The IRS requires each payment settlement entity, such as PayPal, to send you a Form 1099-K if it has processed at least $20,000 worth of payments and at least 200 transactions for you in the previous year. However, some payment settlement entities send out 1099-Ks to all vendors, even if they've only processed a handful of transactions and are below the threshold. However, you need to report this income on your federal and state tax return, regardless of whether you receive a 1099-K.
Usually a 1099-K would be reported through a Schedule C on your tax return. For tax purposes, self-employment income includes any part-time businesses or "side work" performed in which you are in business for yourself, rather than another person. You are also considered self-employed if you engage in business-like activities where you intend to make a profit. This would require TurboTax Home & Business (CD product) or TurboTax Self-Employed (online version).
For additional information on being self-employed, please see Am I considered self-employed?.
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