For Massachusetts State - Paypal 1099 K

[Tax_question10]

Hi I have received more than $600 on PayPal. I read some where I will get the 1099-K form. 

how do I have to file this form please. Do I have to file this only to MA state or Federal level as well 

Thanks 

[Critter-3]

A 1099-K form is just like a W-2 ... it reports income and must be reported on the return in some way.  Failure to do so will result in an IRS audit letter heading your way.

[Tax_question10]

yes 

what I am asking is do I have to report this both at State level and Federal level, as for PayPal MA state and Federal govt have different requirements.  For IRS its is $20,000 per year and for MA it over $600 per year. 

So that the question is I only got $800. Do I have to report this to IRS as well or not only to State. 

thanks 

[Critter-3]

If it goes on the Federal return it automatically transfers to the state.  

[Opus 17 · Accepted solution]

If you file a tax return for any reason, you are required to report ALL your taxable income and to pay taxes on it.  If you are in business, you are required to keep accurate business records of your income and expenses, even if you don't get tax paperwork from your vendors or clients.

The rules on who must issue a 1099-K only apply to the payment processors.  It has nothing to do with you as the receiver of the funds.  You must report all your taxable income on both your federal and state tax returns, regardless of whether you get any paperwork from the payment processor.

Now, sometimes you might get a 1099-K for money that is not taxable income (such as gifts received from GoFundMe or similar platforms).  And sometimes the money might be "other income" and sometimes it is self-employment income.  And the entire amount is not always taxable, especially in the case of self-employment, because you can deduct your ordinary and necessary business expenses and only pay tax on the net profit.

So the real question is, what did you do to get the money that will be reported on a  1099-K? 

[Tax_question10]

I review the items (which I need for my house) available on online website, after that seller refund me part of the price, sometime full price.

[Critter-3]

A refund of the purchase price is simply a discount however you did work for the discount so it is considered income.  

[Opus 17]

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@Tax_question10 wrote:

I review the items (which I need for my house) available on online website, after that seller refund me part of the price, sometime full price.

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@Tax_question10 wrote:

I review the items (which I need for my house) available on online website, after that seller refund me part of the price, sometime full price.

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The general rule is:

Because you performed a service in exchange for compensation, you would be considered self-employed and you would report this as taxable self-employment income on schedule C.

You might be able to report this as a hobby as "other taxable income".  You would not be able to deduct expenses (which you probably don't have anyway) and you would not pay the additional 15% self-employment tax.  The difference between a hobby and self-employment is that self-employment is the result of "an ongoing trade or business" where you hold yourself available as a businessperson, you seek business, advertise, and do other things that a business does.  There is no one factor that decides, it is a combination of individual facts and circumstances.  

https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business