topic Re: PayPal 1099K in Business & farm

PayPal 1099K

sansol01 — Mon, 15 Mar 2021 21:53:01 GMT

The PayPal 1099K received includes amounts also reported on 1099 NECs received. What is the best way to reduce and explain the reduction of the 1099K Gross Amount to exclude the reported 1099 NEC amounts in turbo Tax?

Re: PayPal 1099K

DawnC — Mon, 15 Mar 2021 22:14:52 GMT

The 1099-K form is not entered into TurboTax. You only report the net amount (after adjustments) in the General Income section. Be sure to subtract out any amounts not considered income (i.e. cash backs) and only include the income for this business before reporting the amount on your 1099-K. Subtract out any amount you included from another Form 1099. Keep records in case you receive an inquiry. As long as the income was reported on your Schedule C, you won't have an issue. It all gets added together and report on Line 1 of your Schedule C.

Re: PayPal 1099K

sansol01 — Thu, 18 Mar 2021 18:17:21 GMT

Not sure that is a complete answer inasmuch as if you only put the net amount in Turbo Tax without anything more the IRS will see a discrepancy between the net amount reported on Schedule C for the 1099-K and the amount reported by Pay Pal to the IRS in its 1099-K. Therefore, in an attempt to avoid such an inquiry I am reporting the net amount on Schedule C as suggested but including an additional sheet explaining that the Pay Pal 1099-K included amounts from two 1099 NECs which 1099 NECs were reported in Schedule C and subtracted from the Gross Amount of the Pay Pal 1099-K.

Re: PayPal 1099K

gloriah5200 — Thu, 18 Mar 2021 21:42:42 GMT

Yes, You probably could enter it as an expense on your Sch C but label it as such that it is self-explanatory and you won't need to attach the additional document.