since Paypal does not sort fees from reimbursements, how will the IRS deal with this? Don't tell me they will in an audit. They can't audit millions of people getting a 1099K You want to bet they will tax you on the higher of the two. They just might make reimbursements taxable.
Edited 1 time(s). Last edit at 01/31/2025 10:34PM by johnb974.
It's really more for you to sort out the differences in payments and reimbursements than the IRS. You should deduct your expenses and reimbursable amounts on the schedule c.
It's really more for you to sort out the differences in payments and reimbursements than the IRS. You should deduct your expenses and reimbursable amounts on the schedule c.
That's where they're going to expect that people show their NEC income on their tax return. The 1099 K shows the amounts that went into paypal, not the source. So it could be online sales, etc. The 1099 NEC shows the source of the money, and that you did work as a non-employee, aka contractor.