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

[Hal_Al]

Please post to the other thread, to keep the discussion in one place and with more eyes on it. 

[toucan40]

I have a similar situation and the other thread didn't seem as appropriate.  Basically, I have a PayPal account used for a boy scout troop to facilitate dues payments and collect money during an annual mulch fundraiser.  This money is taken from paypal directly to the troop checking account.  Since this isn't personal income, do I ignore it when entering info into my personal taxes in TurboTax, or does it need to be recognized and then offset elsewhere?

[ToddL99]

Enter the 1099-K in TurboTax (see below) and add a separate line item with a negative amount that represents the payments that were conveyed to the Boy Scout troop as dues or fund-raising receipts.

To report the income:   

• Type "other reportable income" in the search window (or in the Search Topic window for desktop versions)  

• Click on "jump to other reportable income  (or "other reportable income" in the Search Topic results)  

• Answer "No" to "Did you receive any other wages?"  

• Select "Other reportable income" from the Miscellaneous income list  

• Select Add another Income item  on the Other Miscellaneous Income Summary screen  

• Enter a Description ("1099-K Boy Scout Dues"?)and the amount reported,  then click on Continue  

The amount will be reported on line 8 of Schedule 1 (Form 1040).  

To enter the adjustment:    

• Type "other reportable income" in the search window (or in the Search Topic window for desktop versions)  

• Click on "jump to other reportable income  (or "other reportable income" in the Search Topic results)  

• Answer "No" to "Did you receive any other wages?"  

• Select "Other reportable income" from the Miscellaneous income list  

• Select Add another Income item  on the Other Miscellaneous Income Summary screen  

• Enter a Description ("1099-K Boy Scout Dues"?) and the amount as a negative number,  then click on Continue  

A corresponding negative amount will be entered, and line 8 of Schedule 1,  will be zero.  

[NMX]

My son picked up and expensive handbag for a friend and paid for it.  She reimbursed him on Paypal after he sent her a PayPal bill.  Now he has a 1099 K for $1593.75.  He was just doing a favor for a friend and she is the owner of the bag.  

What to do?

[ToddL99]

Enter the 1099-K in TurboTax (see below) and add a separate line item with a negative amount that represents the reimbursement from his friend.

To report the income:   

• Type "other reportable income" in the search window (or in the Search Topic window for desktop versions)  

• Click on "jump to other reportable income  (or "other reportable income" in the Search Topic results)  

• Answer "No" to "Did you receive any other wages?"  

• Select "Other reportable income" from the Miscellaneous income list  

• Select Add another Income item  on the Other Miscellaneous Income Summary screen  

• Enter a Description (Reimbursement via 1099-K) and the amount reported,  then click on Continue  

The amount will be reported on line 8 of Schedule 1 (Form 1040).  

To enter the adjustment:    

• Type "other reportable income" in the search window (or in the Search Topic window for desktop versions)  

• Click on "jump to other reportable income  (or "other reportable income" in the Search Topic results)  

• Answer "No" to "Did you receive any other wages?"  

• Select "Other reportable income" from the Miscellaneous income list  

• Select Add another Income item  on the Other Miscellaneous Income Summary screen  

• Enter a Description (Cost of 1099-K Purchase) and the amount as a negative number,  then click on Continue  

A corresponding negative amount will be entered, and line 8 of Schedule 1,  will be zero.  

[Stacy71276]

I received a 1099k form from PayPal but most of the money was my son transferring money he had borrowed.  Do I have to report that?

[KathrynG3]

Yes, it should be reported. However, it should not be taxed. The IRS receives copies of all government forms and reconciles that information to what is reported. Therefore, report the income and report the gift. It will result in $0 total. 

• If you have a PayPal account for business use, then report the amount from your son as a refund or rebate in the income section to offset it.
  • Report Form 1099-K as received in the COMMON INCOME section under Other self-employed income, includes 1099-K, cash, and checks
  • Report the amount that was given to your son under LESS COMMON INCOME using Rebates and refunds, includes any income returned to customers, which will be a reduction of the income paid back.
• Otherwise, for personal expenses and reimbursement, report both the income and the expense (as an offsetting negative amount) as Other Miscellaneous Income. 
  • To do this in TurboTax Online, follow these steps:
    • From the left menu, go to Federal and select the first tab, Wages & Income
    • Add more income by scrolling down to the last option, Less Common Income, and Show more
    • Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
    • Choose the last option, Other reportable income and Start and Yes
    • Enter the applicable description and amount and Continue
      • First, enter Form 1099-K as received labeled something like Form 1099-K personal reimbursement. 
      • Next, enter an adjustment to reflect the personal reimbursement as a negative amount labeled something like Form 1099-K personal expense.

@Stacy71276

[uckoff]

you said that you used TT business, then you sand that you used TT home and business.  

So which one did you use?  Turbo Tax home and business does not tell you that if you are an S-corp you cannot file your business taxes with TT home and business, You must file your business taxes with TT business, then when you do it will produce a 1099 for you to use when you file your personal taxes with TT home or home and business (you dont need to use home and business if you are an actual S-Corp or corp because you dont claim any business expernces on TT home and business because you do that with TT business when you file your business taxes which are separate from personal.  When you do use TT business then you must use the 1099-k from PayPal as your business income under your business filing using TT business NOT your personal or else you will pay Self Employment tax which is 3 times or more than when you file correctly under your actual business using TT business, then you report the 1099 from your actual business as other income on your  personal taxes and the tax is only what the standard tax table for that amount is when you are down to your actual taxable income.  That is the advantage of having the S-corp election for tax purposes bc it is passed through on personal taxes and not taxed as self employment,  BC you are not self employed you are employed by your business ,  If you did not claim you 1099 on your business tax and you claimed it as SE income on your personal then you would of overpaid in Taxes by probably 75%.  You will need to amended both your business and personal returns and claim the PayPal 1099 on your business and then file you personal as amended as well and you may get $ back  that way as well bc chances are you file incorrectly and you overpaid.  

And it doesn't matter if you paid for Audit defense bc if you did not claim income as reported to the IRS they will send you a letter stating that you owe tax on the amount reported on the 1099-k

[Sassyp]

I don’t own a business and use PayPal to play games online now I got sent 1099k from PayPal

[ErnieS0]

Can you clarify @Sassyp why you are getting money through PayPal?

Even if you don't have a business, if you are earning rewards by playing games, you may have hobby income that's reportable on your tax return.

To enter hobby income:

1. Type "hobby income, loss" in Search in the upper right
2. Select "Jump to hobby income, loss"
3. Answer the questions on the screens.

You can no longer deduct expenses from a hobby.

[Dantheman3]

Hello, I have a similar question.

I received a 1099-k by paypal for a non-profit service. I reviewed items on Amazon and received the products for free after giving my personal experience for the items. I paid for the items to receive them through Amazon and was "refunded" the payments through PayPal. I did not sell or make money off of any item as said by in the 1099-k. 

Is this applicable as non taxable? And if so, do I have to provide screenshots of every purchased receipt reviewed item I bought that fell under this? Or do I need more proof for this?

[LeonardS]

No, you are bartering which is a taxable transaction.  Bartering is the trading of one product or service for another.  You are trading your "review service" in exchange for keeping the item you have reviewed at no cost to you as you are reimbursed the purchase price of the item.

You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. 

You will enter your bartering on Schedule C Profit or Loss from Business.  Follow these steps to enter your business information in TurboTax.

1. Open or continue your return
2. Search for schedule c and click the Jump to link in the search results.
3. Answer Yes to Did you have any self-employment income or expenses?
   • If you've already entered self-employment work and  this as a new business select Add another line of work
4. Follow the onscreen instructions.

This link has information that you may find helpful Where do I enter Schedule C?

@Dantheman3

[ABALLIETT]

Have you already received your PayPal 1099-K for 2021? 

I hope you're able to work this out to your favor.

[burrito143333]

I need help. I received a 1099-k from paypal for 2021 for third party networks (online casinos like fanduel, draftkings, etc) for about 42k. I did not win this total amount at all…I am prolly at a loss rather than a win. This was money i withdrew from my balances on the casino apps and transferred to my bank account or use the paypal balance and use it on the casino app and doing a lot of back and forth for that. What do i do with this 1099-K? I obviously don’t think this is income at all…help :(

[RobertB4444]

Gambling winning are taxable by the federal government.  You should receive form W2G from the company running the online casino with your winnings on it.  If you get that form you have to report it. 

This 1099-K you do not have to report.  You may get questions about it in the future.  Save any proof that you have that this wasn't income and instead was money that you simply transferred to yourself.  If the IRS questions it in the future then you will have to have proof handy.

If you really want to include it on your tax return then you will use TurboTax Self-Employed.  You will create a business showing the income on the 1099-K as income paid to you in exchange for whatever you create the business to do.

Then you will create an expense for the exact same amount showing that your business spent the money on something necessary for the business.  This brings the taxable amount received down to zero.