Surely you can just work off funds deposited to your bank from Paypal. Those bank statements are fairly black and white proof of income.

There are copyright lawyers that specialise in this sort of issue. They would also have contacts with specialist accountants. I came across one such based in the US a long time ago but cannot recall. If anybody has such a contact...

Likely much better than trying to get anything out of us. Very easy for us to try to give advice but the responsibility remains with you!

This wont help your current issue but...   

My understanding is that:  Paypal's 1099K are issued when there are 20K in earnings and 200 transactions in a calendar year.  I'm careful to keep the transaction number below 200. 

Per the IRS, You should receive Form 1099-K by January 31st if, in the prior calendar year, you received payments:

� from payment card transactions (e.g., debit, credit or stored-value cards), and/or
� in settlement of third-party payment network transactions above the minimum reporting thresholds of:
   -  gross payments that exceed $20,000, AND
   -  more than 200 such transactions

(Just in case you're freaking out about never receiving a 1099K)

I had this happen one year but haven't gotten an audit. I reported all my MISC 1099 and put the left over paypal payments in the "other income" section of my schedule C. I did not report the 1099-K but all the numbers add up to equal the 1099 K. Make sure to keep all your statements in order so you can show everything adds up and matches.

So sorry this is happening though.

Per the IRS, You should receive Form 1099-K by January 31st if, in the prior calendar year, you received payments:

� from payment card transactions (e.g., debit, credit or stored-value cards), and/or
� in settlement of third-party payment network transactions above the minimum reporting thresholds of:
   -  gross payments that exceed $20,000, AND
   -  more than 200 such transactions

(Just in case you're freaking out about never receiving a 1099K)

Anyone with less than $20,000 AND more than 200 transactions. So it doesn't matter if you have 1,000 transactions, if you didn't make $20,000 which doesn't meet the trigger for a 1099

To answer how I handle it, itemized schedule C income, I have an accountant, she's got the brains.

Yes I've been audited, the IRS was actually very nice, my mileage was disallowed, I paid $5,000 with penalty and interest. Note: in my state, if you are audited by the IRS, you are required by law to notify the state. The state told me that after I hadn't informed them. They weren't very nice... But the IRS was an actual, in person audit, not a letter saying, please explain something that was questioned.

https://steemit.com/dlive/@jerrybanfield/f379acd0-2920-11e8-a5a6-dd5b02004a6a

This guy adds the "double reported incomes" as an "expense" on his schedule C.

"In other words, I put the exact PayPal "1099-K" income, I put the exact "1099-Miscellaneous" income, and then all I do in my expenses is I add in a line, essentially an expense back to that client for the double payment, because the client only actually paid me once, and yet the same income is reported twice.

Therefore, I put in an expense back to that client to cancel out the double income reporting. Then, if there are questions it's easy for me to demonstrate in my "1099-K" this income was reported here and in my "1099-Miscellaneous" the client reported it there.

I was only actually paid once, so this is an expense that cancels out the double payment, which reflects the truth. The truth of one single payment sent for this amount without reducing the income reported to the IRS."

Smooth!

Your mileage was disallowed? For why, if you don't mind me asking.

J

Bad Records.  Self employed, sales rep. for a company, traveling from factory to factory, or calling on distributors. Not detailed enough. I had a bunch of dates and miles, didn't log where to, who, exactly, and from, and basically, my fault. I'm sure there's a note on my IRS file now.

I saw the top page when the state audited me, a copy of a letter when I hand wrote, the year they lost my return. Yeah, on top, negative, as I asked how come they couldn't find my return, when they could come to my office and spend three days, looking through sales tax exemptions from my customers, which was a waste of time. They made it a point to sit that on top for the auditor! A little revenge on their part maybe?

Now for photo, I have a log sheet, I start, mileage, all gas stops, includes motel, and I keep all the receipts! Each event is a sheet on it's own for the weekend. I don't include or claim food or anything else except travel expenses and lodging. Well yes, if I buy a memory card or something, that's in there.

I don't deduct most other photo shoots, I do deduct and depreciate equipment, with date purchased and cost. If I sell, I have to record that. Another database.

I don't claim my "home office" too much of a flag for further investigation. Nice as it's a buffer if I do get audited. What I'm saying is, I actually under claim, in case I make a mistake, so I have some padding on my side. But the ability to claim expenses or some of them for photography, because of Microstock income, is nice.

Bottom line and I'm sure Stockmarketer fits this, keep good records. His income and earning reports here, showed he was quite detailed about tracking work, sales and commissions. Shouldn't be a problem as it's just a double reporting error.

It's a nightmare, if you don't file it right.  You have to make a line item on Schedule C for "duplicate reported income" or something along those lines.  I have to re-check my previous year's tax return every year that I file, because I forget.  One year I was soft-audited and it said I had owed 5 figures in back taxes.  HA!  If only.  It happened to me 2 years in a row, until I figured out how to correct it. 

Quote from: ArenaCreative on April 10, 2020, 14:48

It's a nightmare, if you don't file it right.  You have to make a line item on Schedule C for "duplicate reported income" or something along those lines.  I have to re-check my previous year's tax return every year that I file, because I forget.  One year I was soft-audited and it said I had owed 5 figures in back taxes.  HA!  If only.  It happened to me 2 years in a row, until I figured out how to correct it.

Hey there, thanks for that tip.  Still wondering how to handle it this year. If you find the specifics again, could you please share?

Looking and looking, the answer (which I'm sure doesn't help much and is not what you wanted to hear) is wait until you are billed for the duplicate income and have a good set of records and documents to answer that the duplicate 1099s where issued. I would still expect that filing the 1099-misc under Schedule C expenses could be an answer, it appears there is no way to reconcile before being audited or informed of a penalty.

https://forst.tax/what-to-do-if-your-income-is-reported-on-both-1099-misc-and-1099-k/

What this article says is, the computers don't know and see all 1099s as income. They won't distinguish between duplicates and identical forms. This has to be a common enough problem since 2011 as there are many articles and questions on the web. I have yet to find a specific answer, detailing how to include this duplication as an expense on the Schedule-C.

Honest, I don't do my own taxes. I pay a professional and for what she charges, considering she's trained, up to date and knows the laws and regulations, she saves me as much as I pay, maybe more?

What I'm saying is... ask a professional accountant not a photographer?    I have found since I was audited, because I hired some part time tax preparer (in the 80s) who made mistakes, that the money I pay a professional is well worth the knowledge and their deduction expertise, not just the filing taxes part. One of the fines was over $5,000 for penalties and interest. For what? I saved a $150 by having a cheaper friend?

Now I pay an account and I smile in comfort that my taxes are done right, I won't get stabbed with high fees and interest penalty. With being audited by the IRS and the state, on my account (which means they watch closer) I've never had a problem since then. She handles all the best deductions, equipment depreciation, income and expenses, and I get back my return, no long hours or apprehension, "did I do that right"?

Optional answer #2. Pay an account, see what they did to reconcile the 1099 conflict and do that yourself next year. 

Oh and please come back and tell everyone else.

Answer #3: Write to the IRS and ask them?

Quote from: stockmarketer on April 10, 2020, 20:40

Quote from: ArenaCreative on April 10, 2020, 14:48

It's a nightmare, if you don't file it right.  You have to make a line item on Schedule C for "duplicate reported income" or something along those lines.  I have to re-check my previous year's tax return every year that I file, because I forget.  One year I was soft-audited and it said I had owed 5 figures in back taxes.  HA!  If only.  It happened to me 2 years in a row, until I figured out how to correct it.

Hey there, thanks for that tip.  Still wondering how to handle it this year. If you find the specifics again, could you please share?

Other expenses section on the Schedule C, where you can enter your own description - here is what I've been doing about the past 4-5 years and with no more issues:
"Duplicate 1099-MISC Income (Received Through Paypal)"  - then enter the total you've earned through 1099's that also have been sent to you via PayPal.  Another options is here, but it's basically the same thing I just mentioned:  https://ttlc.intuit.com/community/taxes/discussion/if-i-have-a-1099-k-and-a-1099-misc-for-the-same-income-do-i-not-include-it-on-the-1099-k/00/121801

Done.

As for how to get out of the double-reported soft audit, it's a pain in the balls.  You have to screenshot all your paypal transactions showing the payments from each agency that sent you money that way.  It took me like a week, that's why I said it was a nightmare.  You will never make this mistake ever again.

I'm not an accountant, but I found this method somewhere on the web from a random CPA.  I'm not paying someone $2500 to prepare my taxes, not when all they do is enter it into a computer program.  I'm still the one that has to get them all of the figures, and that's what takes the most time anyway.

LOL good preemptive strike against the audit. Seems like that should work if a human looks, after the computer plooks out your return for audit. 

My taxes for a business, employment, self employment, photography, eBay and anything else buy and sell, like auctions, contracts, gigs, costs under $400 a year. She does use a computer but she also gets a bag full of receipts, papers, forms, check stubs and everything else. I don't do a critical sort, just folders and loose receipts with things on them like "Photo expense".

When I did a cross check and used Turbo Tax myself, I owned hundreds more than when the accountant did the same taxes, with the identical documentation.

Just pointing out from personal experience for over 20 years now.

Last time I went to an accountant for him to review my return, he offered me a job.  I laughed and thanked him, and he just gave me a few pointers on some added deductions.  I'm not paying the CPA's what they want for an advanced return like mine, not here in CT.  $400 is a bargain... here, try $2000+.  I've been doing my own taxes for over 20 years as well, and at this point I'd rather spend the time and make sure I'm doing it right.  It also allows me last minute changes, and I review all of my steps 10 times over.

Good going Todd. Sounds like you have that under control and the best answer of anyone for the double 1099 problem.

I'm too inept at tax things to do them myself. And yeah, if the difference is $400 here vs $2,000 there, WOW! nuts.

Just got an email from Paypal today about the threshold being lowered down to $600.
   

Quote

You've received $600+ in goods and services payments this year which the IRS considers taxable income. PayPal will make it easy for you by tracking your commercial income and sending you a 1099-K early next year. PayPal supports businesses by including Purchase Protection on eligible purchases, providing tools and reporting to help businesses run smoothly, and more.

Does this mean all my 1099 income from Adobe Stock, Shutterstock, Pond5, etc. are going to be double reported this year?

Yes, the laws changed.  https://www.bnctax.com/blog/paypal-will-report-goods-and-services-transactions-totaling-600-or-more-to-the-irs-in-2022/#:~:text=Due%20to%20the%20new%20regulations%2C%20digital%20payment%20processors,taxation%2C%20it%E2%80%99s%20only%20a%20change%20in%20reporting%20requirements.

This is part of the new President and his pals: American Rescue Plan Act (ARPA), P.L. 117-2, amended this de minimis amount to $600