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

[hkweller]

After reviewing my PayPal ledger I'm still finding $14,500 in what were winnings that were small wins that combined over the year reached this #. Do I need to still claim these as gambling winnings since they did not reach the required threshold to generate a W2G ? Thank you. 

[DianeW777]

Yes.  Any gambling winnings is taxable income starting from $1,00 with or without a document such as a W-2G.  

• IRS Topic 419 Gambling Income and Losses

Enter the gambling winnings using the steps below.

1. Sign into your TurboTax account
2. Select Federal tab (on the left) > Wages & Income > Less Common Income > Gambling Winnings > Start
3. Follow the screen prompts based on your situation (reporting document or none)
4. Be prepared with your gambling losses as well (this will be used only if you can itemize your deductions)
5. See the image below for assistance

@hkweller

[hkweller]

After reviewing this further, these were not actual winnings, merely cashouts for deposits that exceeded this #. So I'll just put a negative note on the 1099k subtracting these as cashouts from deposits that exceeded this #. Thank you.

[novarounder]

How do I file for this using a Form 1040. Also the amount stated on Paypal 1099K is not all profit. How do I offset it and how do I describe it. 

for example: the 1099K amount is $3,500 but $2,000 of that is my own money deposited that I’m getting back for the $3,500 total I received. 

[KrisD15]

The 1099-K is INFORMATIONAL so not "copied" onto the Federal 1040.

With that said, the IRS does get a copy and may be looking to see how you report the income. 

If this is gambling income, you can enter it (the winnings) under "Less Common Income" "Gambling Winnings" 

The income will be reported on Schedule 1 line 8b and added to your 1040 line 8

It will be reported as "Gambling Income" but there will be no mention of the 1099-K.

Also, if the 1099-K only reports distributions, you would need to know how much you WON versus any adjustments for what you lost.  You need to enter "winnings" and "losses" separately. Losses are not automatically subtracted from winnings. 

You could also report the 1099-K as "Other Income" and list it as "PayPal 1099-K" and then enter a negative number to back-out your personal deposit so that the IRS would have a full explanation of the numbers reported on the 1099-K compared to what you claim on your 1040, but it really isn't required and it doesn't reflect how gambling winnings are treated.

If the 1099-K from PayPal is for gambling winnings, you'll need to report it as such and you'll need to know how much you won and how much you lost. If you won $150 yesterday and lost $200 today, you have 150 in winnings and 200 in losses, but you can only report losses UP TO the amount you won (150). 

The loss is reported on Schedule A if you Itemize Deductions. If you take the Standard Deduction, the loss is, well lost. 

So in the example, if you take the Standard Deduction, you would claim 150 as income and the loss would not be counted.

If gambling is your "trade" you report it on your Schedule C. 

IRS LINK on gambling

[thyname11]

I received a 1099-k from PayPal for 2021. I am in one of the few states with much lower limits ($600). I sold a few used items, all of them for a loss, compared to original purchase price when new. There was no profit on either one of the items sold. Also, I am not a business, and these were personal items.

Do I have to report anything, or do I just ignore this 1099-k form? If I do have to report it, how? I am using TT Premier desktop version for Windows. Thanks!

[LenaH]

No, you have to report it, but you can deduct it on the following line so it nets out to zero on your return. Please note that you cannot deduct a loss from selling personal items. 

To report and offset the cost, please follow these steps:

1. From the top menu, go to Federal Taxes.
2. Click on Wages & Income.
3. Pick the option I'll choose what I work on.
4. Scroll down to the last option, Less Common Income.
5. Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start.
6. Choose the last option, Other reportable income and Start and Yes.
7. Enter the applicable description and amount and Continue.
   • First, enter Form 1099-K as received. It is essential that the full amount be entered.
     • For a description, include Form 1099-K and Personal Property Sales.
   • Next, enter an adjustment to reflect the cost of these items as an offsetting, negative amount up to the amount of the income. 
     • For the cost description, include Cost of Personal Property 
     • In other words, if the goods cost you $100 and Form 1099-K was for $10 in sales, the maximum cost allowable would be $10.

@thyname11

[thyname11]

Thanks @LenaH ! I did exactly that. Wish me luck!

[Luckygurl420]

Would this work the same for online casino deposits and withdraws transactions on PayPal? I received a 1099-k and my amount was over 50k but I didn't make 50k. Im at a loss if anything. It was all my original money going back and forth. 

[ThomasM125]

You are correct, if the money does not represent income, then you don't need to report it as such on your tax return. You should keep documentation sufficient to prove that the receipts are not income, in case the IRS demands proof later on.

@Luckygurl420

[Luckygurl420]

This is my first time filing taxes so I don't know what documents I need. Would they be my win/loss statements from the casinos and a printout of all my PayPal transactions?

[Vanessa A]

Yes, your win/loss statements from casinos and a printout of your PayPal transactions would be sufficient documentation. 

[Penguins123]

So I received a CP2000 for accidentally not filing my 1099k which, like the previous question stated was for transactions through a Sportsbook and PayPal. The “income” is over 50k and is not in winnings just a cumulative withdrawal. My win/loss statements were all negative and there were no major winnings to generate a tax form. They want me to file this and are saying to “deduct my losses” because they don’t seem to understand. Should I just tell them that this is not income and not file-able and have all my statements and PayPal transactions available?  Thank you! 

[Jim10180]

I used my paypal account to do transactions on a casino app and they sent me a 1099K . I dont have a business and i dont sell anything .  The app was all i used paypal for , Do i need to just report the W2G the casino sent me for my winnings ? Thanks ! 

[JulieS]

Yes, as long as the W2G shows the full amount of your winnings, you can just report the W2G. Keep the 1099-K with your tax records and make a note to yourself that the amount is reported on W2G. 

If the amount of the 1099-K is more than the amount shown on your W2G, click here and follow these directions.