You will need to contact PayPal to see how they are accounting for refunds. The responses from customers seem to be split that some are saying they had their refunds removed, while others are saying the refunds are included in income.
If, you are self-employed and have your own accounting method, that already accounts for the income you receive through PayPal, you do not need to do separate entries for the 1099K. You will need to keep the form for your records, but you do not need to split it out from other income. This means, if you accounted for refunds in your regular accounting, you can use your numbers for your tax return to be sure you do not overreport or underreport your income.
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