I received a 1099K form from Paypal as a result of selling online. I entered it as self-employment income and both federal and state refunds increased. Is this correct?

You should report the income from the 1099K as self-employed income and take whatever expenses you incurred in selling your product.  Since self-employed income is considered earned income and if your income is low and you qualify for Earned Income Credit, you may receive more credits with the added income than without.

Actually, this might have helped had I not sent filed a couple of days ago.  I followed the advice of another Tax Expert.  I reported the 1099K as other income, but did not list expenses because I did not compile a record of them.