PayPal Goods and Services are reimbursements for product reviews
I am a mystery shopper where I pay my own money for something on Amazon, evaluate the item and review it, then I am reimbursed for my purchase via paypal (exact same amount I paid for item so totals out to $0). However, I received a 1099 K form from paypal. It turns out that when the funds were sent, it was issued as Goods and Services instead of friends and family. Since I didn't make any money during this process? How should I proceed and where do I deduct this?
Do I select the option saying 'Did you receive a 1099-K that's incorrect?" and mark yes and attempt to contact paypal to correct it and then select yes for "Was your Paypal 1099-K from :Personal transactions" on the next page? And for this question "Enter the amount that shouldn't be included on your 1099-K". should I enter the amount from the 1099K listed from paypal?
Or should I enter the value as self employment income and do something else? I really don't know where to go from here.
Best Answers
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Thank you for joining our community e94904.
You are performing a service even if you have a $0 profit at the end of the service. So, the right way to report this 1099-K income is on the Schedule C since you are performing a service. Included in the process of filing a Schedule C, is the listing of Common Expenses.
You start a Schedule C by navigating to the Income area and finding the Business Income (Schedule C). Then click the icon to Add a Business. Follow the prompts and questions until you get to the screen asking if you received 1099-K income. The next box is where you enter the income showing on the 1099-K. The next page lists the Common Expenses. You choose which expense to use, like supplies or you can use the Miscellaneous lines at the bottom of the page for more specific expenses. The bottom line is that you will show a $0 profit with $0 added to your income, but the best part is that you will have reported the income received on the 1099-K.
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I see. I am trying to enter the business code for "541910 - Product and Service Evaluation" but the only option there is "541910 - Market Research & Public Opinion Polling". Would this work as the same thing or should I use the other options like "541990 - All other professional, scientific, & technical services" or just use "999999 - Other/Unclassified"?
Answers
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That is a good question. The accuracy of the code isn't as important as the income and expenses. This just get the IRS in the realm of the type of business you are running for classification of income and expenses. Either option will work, or you can still choose the Other/Unclassified option if that is more comfortable.