Paid taxes on income last year on income soon to be reported on a PayPal 1099

Forum|Forum|3 years ago
December 12, 2022
3 replies
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I earned money last tax year (2021). I was paid by my clients using PayPal. Last year, I included this money earned in my income but the money sat in PayPal. Recently I pulled out those funds. I anticipate a 1099 from PayPal. That will now be a double tax on that money. How do I tell the IRS that those taxes were already paid? Conversely, should I amend last year and then pay the tax this year? What is the best approach?

Bsch4477

Do not amend. If you can’t get the 1099-K to reflect only 2022 income you can adjust the amount which is taxable on your 2022 return. Lots of people are in your situation and the IRS may have instructions to deal with this. There are also ways to get around this problem in TurboTax. Stay tuned.

VolvoGirl

You get the 1099 when the money GOES INTO PayPal not when you take it out. It is for money paid to you. Nothing you need to do. The 1099 limit of $600 is new for 2022 so you probably didn't get one for 2021. So I don't think you will get a 1099 for 2022 unless someone paid you in 2022.

sewardje2Author

Thanks all. We'll see what happens.

Critter-3

Agreed ... a 1099-K is only issued when new money comes into the account ... taking distributions from the account is not reported no matter which tax year it happens in. This is the same as if you put the money in your checking account ... it is only taxes as income in the year it is earned no matter when you spend the funds.