Company pays with Paypal and sends 1099-NEC each year. What will happen when issued 1099-K for same amount?

[Booksandtea2]

I receive a 1099-NEC every year from a company for book royalties. The company pays me monthly via Paypal. What should I do next year when I receive a 1099-NEC from the company and a 1099-K from Paypal for the same amount? I'm sure there will be many others in the same situation. I hope TurboTax will factor that in when designing next year's software, but if they don't.... 

[JamesG1 · Accepted solution]

Assuming that you correctly report the income reported on the IRS form 1099-NEC, In TurboTax Online, report the IRS form 1099-K which duplicates the income as follows:

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Scroll down to Other Common Income.  Click on the down arrow to the right.
• Click the Start/Revisit  button to the right of Form 1099-K.
• At the screen Did you get a 1099-K? click Yes.
• At the screen How would you like to enter your 1099-K? click Type it in myself.  Click Continue.
• At the screen Choose which type of income your 1099-K is for, select the button for Hobby income.  Click Continue.
• At the screen Let’s get the info from your 1099-K, enter the information.  Click Continue.
• Select This amount in box 1a is too high or includes some personal transactions.
• Enter the full amount of the 1099-K in the box Enter the amount that shouldn't be included.
• At the screen Your 1099-K summary, notice that the income relates to ‘Hobby’.      Click Done.

The entry will be reported:

• on line 8j of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

Under Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets, you will find the exclusion noted on the Schedule 1 Line 8 Other Income Statement.

[tax1120s]

For Tax Year 2025 If a Company pays with Paypal and sends 1099-NEC each year. What will happen when issued 1099-K for same amount? I am using TurboTax desk top download. 

[JamesG1]

If, for 2025 tax season, an IRS form 1099-K and an IRS form 1099-NEC each report the same gross income amounts, there are steps that can be taken to report the gross income as the IRS desires, but correctly state your net income (taxable income) on your individual income tax return.

When reporting IRS form 1099-K income, the IRS permits you to report amounts that are too high or are personal transactions on Schedule 1 Form 1040.

IRS form 1099-NEC income generally reports self-employment income.  Adjustments may be made within the self-employment activity reported on Schedule C of the IRS form 1040 to reduce incorrect gross income to the correct taxable income.

Post here should you have questions about your specific situation.