Patreon 1099-k and Paypal 1099-k forms for nearly the same amount.

[neko2]

This is my first year dealing with 1099-K forms in general, but I have a issue that I want to be fully 100% sure about. This is all for 2020.

My Patreon sent me a 1099-K form, but that income payouts to Paypal in order to reach my bank account. I noticed that Paypal has also sent me a 1099-K form claiming it's "Final version - Your copy of the form we send to IRS" updated on Jan 23rd. The issue is that the Paypal 1099-K form is counting every single Patreon transfer from the company into my Paypal account before it goes into my bank account, as if its not being counted by Patreon already.

So from the IRS point of view, if I don't report the Paypal 1099-K form. They're going to look at it as if I made double the real amount I did from Patreon and send me a letter?

When trying to contact both Patreon & Paypal support to clear up any misunderstandings, Paypal wasn't very helpful and pretty much told me that they're just following their protocol for the IRS. They wouldn't let me know if they'd be fixing the 1099-K form to show a corrected amount, nothing. Patreon went to their own tax team to ask and double check the details, but there could still be a communication problem between the two companies? (Below is what Patreon support sent me)

"I reached out to our Tax team and they asked to share this message with you:

Rest assured, we are hammering out the contract/details but Paypal will be issuing you an amended 2020 From removing the Patreon funds from their reporting. While the 1099K forms are due to Creator by the end of January, they are not due to the IRS until the end of March. As such, you should heard from Paypal by that time with an amended return.
Either way we’ll make sure you don’t get double reported.
Sincerely, Patreon Tax."

Now even if that is true, I've never had to deal with an amended return either before. So how exactly should I file my taxes here on TurboTax based on that? Should I fully file everything or hold off until I see something from Paypal first for the amended fix?

I just don't want to end up paying double the original amount I really did earn or not pay what I should from Paypal if there is anything to report with them, keeping the IRS off my back.

[JeffreyR77]

You have two options:  One, wait and see if Paypal in fact issues you an amended statement and then file your return based on that amended statement, or Two, file now addressing the duplication of income reporting between the two funds handlers.  

You haven't said whether you are receiving payments from a business activity or not. 

That makes a difference in how you report this income and address the duplication of payouts. 

Tell whether this is a business activity or not.

[neko2]

I'd classify the use of Patreon for myself, personally as a business activity. I am the one leading and managing costs within a team that actively works with me on the content we provide. Patreon also takes out their own fees when processing the funding we actually receive.

[JeffreyR77]

You can merely claim all the 1099-K income as income for your business activity as self-employment income on Schedule C and then claim the PayPal amount as an expense.  You can then deduct your other ordinary and necessary business expenses to reduce your taxable business income.

[neko2]

Is there a special way to fill that out? When I began filling everything out for self-employer 1099, I didn't have any pages ask me to fill in the information from the 1099-K forms I have. So just that I understand correctly, in the deductibles area I would minus the paypal amount that's being counted from patreon's 1099-K already? (So all together put down both amounts from patreon and paypal as what I earned. Then in deductibles, I'd put down what should be minus from the paypal amount? Is there a special deductible to claim that as?)

Thank you by the way for the help so far.

[JeffreyR77]

You will claim the income from the 2 1099-Ks as self-employment income in TurboTax Self-Employment , Federal, Wages and Income, Self-employment Income:

Once you have created your self-employment activity, you can enter Expenses.  You can enter your PayPal expenses as Commissions as they are paid on all transactions.

[neko2]

Thank you very much! I'm double checking everything else to be sure that I've covered everything else before I file.

When I go through for the review, its popping this screen up to review and fix.

I don't know what to do here? I haven't received a "Sch SE-S" ? and yet its asking this. Is there something I missed? I'm also curious about my 1099-K forms, since I never saw a screen pop up in the progress to fill out all the details of my 1099-K forms, just the self-employer income totals for the 1099-K forms showed up. (I'm used to W2's where you'd have to fill out much of the information seen on your W2. )

[gloriah5200]

The Sch SE-S is the self-employment tax calculation form that is generated in TurboTax when you have a net profit on your self-employment income that is subject to self-employment tax on your return.  It calculates the self-employment tax to be added as tax to your return.

This tax year there is a benefit that you can defer some or all or none of the self-employment tax due on your return.  It is your choice and the questions to be answered are in the software.  TT will ask you the amount of income earned from March 27-December 31 of 2020 and then ask you how much of the se tax you want to defer