duplicate zazzle / paypal 1099? (new $600 threshold)

[PopParrot]

With the new $600 IRS reporting threshold, I'm wondering whether there's a chance of getting duplicate 1099's from both Zazzle & Paypal. If I understand correctly, Paypal only counts received payments on a 1099K if the sender (Zazzle) reported the payment as goods and services. If Zazzle sends our royalty payments marked as royalties, Paypal shouldn't also be reporting them, correct? If our paypal payouts are marked as goods and services, we're going to get dupe 1099's. How do we tell whether our payouts are marked royalties or services in the eyes of Paypal?

[Marcia]

I remember this question was also asked last year but there was never an answer. I would love to know this as well.

[Barbara]

Maybe the telltale fact is that I never got a duplicate 1099 from PayPal last year and am assuming it'll be the same this year.

[PopParrot]

Last year's reporting threshold at Paypal was $20,000. This year's is $600. 

[Barbara]

I guess that could make a difference. Because it's been $600 with the IRS for quite a while, I assumed it was the same with PayPal.

Colorwash's Home

[ZBug]

Depending on the state you live in, it's different amount. In my state it's always been a low threshold. I had to go off PayPal and back to getting check in the mail. (Which sucks.)

[ZBug]

https://www.paypal.com/us/cshelp/article/help1131#:~:text=If%20you%20live%20in%20the,of%20the%20numb....

Five state were already under 1000 and 4 already at 600

[chefcateringbiz]

I assume the IRS will attempt to charge us all double. After I receive my December payment, I'm switching to getting a check. I'm not going to get into a "thing" with our income overlords, it will just make my blood pressure skyrocket.

[Photocrazy6 · Accepted solution]

This has been postponed again for this year. I think they are finding out there will be a lot of kinks to work out. For instance, I have rebate apps that pay me by PayPal and that shouldn't be included. People use it for many different things, same with Venmo.

[PopParrot]

Do you have a link to this info, @Photocrazy6 ? The help section on Paypal's site still says they're going with $600, but they don't necessarily keep their help docs up to date.

Edit: Found the revision on the IRS website. Thanks for letting us know!
https://www.irs.gov/pub/irs-drop/n-23-74.pdf 

[Photocrazy6]

Yes, I always go to the IRS site to confirm things. Sounds like next year they will be sort of phasing it in to $5,000 vs $20,000 it is now vs dropping down to $600. I bet they got a lot of feedback from the payment providers of how much of a backlog it could cause them. I'm glad to see they will be slowly working it in because I can see the potential for a lot of issues.

[HRSinclair]

So, I just spent 2 hours on the phone with the IRS for them to tell me, they don't know, ask an accountant. 🙄

After researching more this is what I found out.

1. Report the Total Income
On Schedule C (Form 1040), report the total income from both the 1099-MISC and the 1099-K. This ensures that all income is accounted for.

2. Adjust for Duplicate Reporting
To avoid double counting, you can make an adjustment. On Schedule C, list the duplicate amount as a negative entry under "Other Income" or "Other Adjustments." Label it something like "Duplicate 1099-MISC/1099-K Income."

edited to add that I found this as keepertax.com