1099-K from PayPal (tax form)

I'm guessing its because the buyers asked me to send them a "invoice" (i.e. not Friends and Family payment option) so because of that Paypal treated the transactions as business sales. None of the other dozen or so friends and family transfers from 2020 appear on the 1099-K.

I just compiled a list of all payments received with PayPal during 2020. Including the PayPal friend & family, some not even related to Audio at all (just real friends and family stuff), I had received a total of 48 payments. Definitely NOT two hundred. I don’t know why they issued me a 1099-K. Some of my sales (3-4) was really large, components stuff, so yes, I received over $20K, but I thought it was payments over $20K, AND over 200 payments received.

And I am definitely NOT a business. Why do I have to make up such story?

As for the “invoice” thing, I only had sent 6 invoices, those who asked me to over at USAM.

Anyways, thanks all for chiming in. I will figure this out. It’s just going to take time and effort I was not prepared to have.

typically a 1099k is reported on a sch c for sole proprietor or single memebr llc or business returns.

I do not use turbo tax to prepare my clients returns but if they instruct you to report as other income just make sure there is a spot to input info from the 1099k to a 1099k input form. Even if you zero this out in this area and it does not show as a 1099k which the irs recieves and cross checks to make sure you have reported on your return.

Another informative Turbotax article which explains why you received a 1099K even though you didn't meet the 200 and 20,000 thresholds (short answer, for basically no reason):

Form 1099-K Decoded for the Self-Employed - TurboTax Tax Tips & Videos (intuit.com)

I would call PayPal and be very stern with them. It appears they have falsely issued the 1099 and they need to riscind it otherwise it will cause you no end of paperwork pain. This is there mistake and they need to fix it. I suspect you will need to elevate this probably up a few levels.

As noted the IRS now possibly thinks this is income and you are looking at big numbers when all your stuff is mixed.

PayPal appears to be covering their asses by screwing you. It is over 20K and 200 transactions. One could even say they are violating your confidentiality as they appear to have no legal reason to report this data.