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JenB1900
Level 2

1099-K from Paypal and I don't have a business

I have received PayPal money transfer from a friend which I transferred back to him via MoneyWise later. It was just borrowed money and not an income.  It was recorded as payment by PayPal and now I have 1099-K. How do I enter this in TurboTax online?

1 Best answer

Accepted Solutions
Hal_Al
Level 15

1099-K from Paypal and I don't have a business

Q. Is there a way to do it without claiming it as an income?

A. Yes. You have to use a workaround in TurboTax.

 

Notice that there is no specified place, in TurboTax (TT) for a 1009K.  That's because you are supposed to know what the income is for.

 

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

Scroll down to:

-Less Common Income

      -Misc Income, 1099-A, 1099-C

       - On the next screen, choose – Other reportable income  

       - On the next screen, click yes

       - On the next screen, you'll get blanks to enter the amount and a description. It will go on line 8 of Schedule 1 as "Other Income".  Suggestion for description: erroneous income on 1099K

 

When that's done, do it again (a 2nd entry).  This time make it a negative entry; put a minus sign (-) in front of the amount. Suggestion for description: erroneous income on 1099K offset

View solution in original post

15 Replies
MinhT1
Expert Alumni

1099-K from Paypal and I don't have a business

If the money received through PayPal is borrowed money, then it is not income and you do not need to report it on your tax return.

 

You do not enter this form 1099-K, but keep it in your tax records with any proof you may have that it is borrowed money, in case the IRS has questions on it.

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JenB1900
Level 2

1099-K from Paypal and I don't have a business

Thank you for your response. But since IRS received my 1099-K I would like to include the amount on my Tax Return. Is there a way to do it without claiming it as an income?

DianeW777
Expert Alumni

1099-K from Paypal and I don't have a business

The Form 1099-K is not a form that is entered or sent to the IRS with your tax return. As @MinhT1 indicated, a loan is not income and does not get reported on your tax return.  Keep the form, notes and details with your tax return to verify the loan and repayment for future use should you need them.

 

PayPal is considered a payment settlement entity(PSE) for money transactions.  Form 1099-K was introduced to report income received from electronic payments, such as credit cards, debit cards, Google Checkout, PayPal and other payers. You should receive this form if you received payments from electronic or online payment services, or credit and debit card transactions.

Hal_Al
Level 15

1099-K from Paypal and I don't have a business

Q. Is there a way to do it without claiming it as an income?

A. Yes. You have to use a workaround in TurboTax.

 

Notice that there is no specified place, in TurboTax (TT) for a 1009K.  That's because you are supposed to know what the income is for.

 

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

Scroll down to:

-Less Common Income

      -Misc Income, 1099-A, 1099-C

       - On the next screen, choose – Other reportable income  

       - On the next screen, click yes

       - On the next screen, you'll get blanks to enter the amount and a description. It will go on line 8 of Schedule 1 as "Other Income".  Suggestion for description: erroneous income on 1099K

 

When that's done, do it again (a 2nd entry).  This time make it a negative entry; put a minus sign (-) in front of the amount. Suggestion for description: erroneous income on 1099K offset

View solution in original post

wokmon
Returning Member

1099-K from Paypal and I don't have a business

I was reading the replies to the 1099-k question.

I using TT business for the first time to file my s-corp. After doing the Fed and then purchased the NY state(NYC SCORP), it occured to me TT didn't ask me for my Paypal or Strip 1099-Ks to report. Would I get in trouble? Used TT home and business 2019.

I did purchase Audit defense just in case.

JeffreyR77
Expert Alumni

1099-K from Paypal and I don't have a business

It depends.  Your reported revenue needs to be at least the amount reported by the total of the Paypal and Stripe 1099-Ks.

 

If the Paypal and Stripe 1099-K statements report more transactions than the gross revenue amount you reported you can expect a letter from the IRS for unreported income.  

 

Please clarify the business entity you had in 2019. 

 

TurboTax Home and Business does not support S-Corporations. 

 

You also should ensure Paypal and Stripe are reporting under the proper business EIN and not under your social security number.

Gerbo20
Level 1

1099-K from Paypal and I don't have a business

I've got a question regarding what is considered loan or borrowed or not?
I also got a form 1099-K from Paypal. I bought two items that I never used and I was doing payments. In the end, I ended up selling them just to pay them off. 
Would that be considered borrowed or loan?  Since I sold them to them off.

AmyC
Employee Tax Expert

1099-K from Paypal and I don't have a business

@Gerbo20 If you sold the items for a profit, then the IRS might wonder if you are buying and selling goods. You can report  just the profit as other income. If you lost money, no worries and nothing to report.

 

If you are reporting it, follow these steps:

 

  1. Log into your return
  2. Federal
  3. Click on Income
  4. Scroll to the bottom section, Less Common Income
  5. Select Miscellaneous income, 1099-A, 1099-C, start
  6. Select Other Income
  7. Did you receive other wages? Yes
  8. Continue
  9. Household employee? Continue
  10. Sick or disability pay? Continue
  11. Any other earned income or wages? Yes
  12. Enter source of Other Earned Income
  13. Select Other
  14. Continue
  15. Enter description Sale of purchased items
  16. Enter amount
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Gerbo20
Level 1

1099-K from Paypal and I don't have a business

Thank you @AmyC .  I think I might lose some money since first I couldn't return the item and the money gotten from the sale was lesser than the amount financed to pay.

ABALLIETT
Level 2

1099-K from Paypal and I don't have a business

Hal-Al, you still stand by this response? I've heard pretty much the opposite of this from Intuit Support ie "if you get a 1099k that includes personal payments you have to go ahead and pay taxes on those payments as you got the 1099k because you are using a business PayPal acct and there is no 'personal monies' in a business acct' (or something like that

 

I assume what you've said is accurate but I'm asking you to confirm. THANKS!!

Hal_Al
Level 15

1099-K from Paypal and I don't have a business

@ABALLIETT 

You're involved in (at least) two different threads that are are going in all different directions.

 

Notice that there is no specified place, in TurboTax (TT) for a 1099-K.  That's because you are supposed to know what the income is for.  The above doesn't tell you that it isn't taxable. It just tells you how to enter it, in TurboTax, once YOU decide it isn't taxable. 

 

The other thread (https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-where-do-i-write-off-obsolete...) tells you how to determine if it's taxable  and is supported by other high level users and this TurboTax  "fact sheet" https://turbotax.intuit.com/tax-tips/self-employment-taxes/a-tax-filing-factsheet-for-ebay-sellers/L...

 

It's my opinion that, based on your description, you just have an online "garage sale". 

ABALLIETT
Level 2

1099-K from Paypal and I don't have a business

I'm obviously still searching for an answer to my question and ran across this entry by you on google

I'm asking if you still stand by this answer or the answer you gave me in the other thread. 

 

Can you answer this question? 

 

Thanks

Hal_Al
Level 15

1099-K from Paypal and I don't have a business

Q.  I'm asking if you still stand by this answer or the answer you gave me in the other thread. 

A.  Both, They're two different questions.

 

What specifically is the question that you're looking for an answer to? 

 

Are you asking does having a "business PayPal acct" change how "online garage sale" income should be reported?  I doubt it, but have no specific knowledge of that.  Does it increase your audit risk? Probably,  but have no specific knowledge of that.

ABALLIETT
Level 2

1099-K from Paypal and I don't have a business

Thanks for you patience, Hal_Al 

 

What I'm asking this time is how do I handle non sale 'payments' that are on my 1099k but that I did not 'profit' from 

 

For example, I do lots of environmental non-profit work I do a podcast and have substantial publishing changes (libsync) that a non profit is obliged to pay for since I work for free but they expect me to be the go between for my acct with the service provider. So they send me a few $300 checks a year and I pass that money to libsync in a separate payment transaction

 

Those $300 payments show up as 'income' on the 1099k, although they aren't even my money. 

 

How do I remove them from the official 1099k total? (I think you showed how to do that and I was just asking if you still believe that method is accurate and dependable) 

 

Thanks

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