Hi mcebuddy,
That's a great question.
The dollar amount shown on the Form 1099-K is your total gross payments received for sales of goods or services that were received through PayPal for the previous calendar year. As required by the IRS, this amount includes all fees and/or payments associated with your sales, including shipping fees or sales tax received. As the dollar amount on your Form 1099-K is a gross amount, any adjustments for credits, cash equivalents, discounts, fees, refunded amounts or any other amounts will not be netted out.
In addition, the reported amount will include any shipping and handling, sales tax or other fees which are included in payments you receive. We realize that these amounts may or may not be included in your taxable income, but we are required to report them. You should work with your tax advisor to determine how these items should be treated for tax purposes.
We are reporting gross annual payment received for the sale of goods or services. All sales will be taken into account, including any transaction that may have resulted in a refund, reversal or chargeback. We exclude Personal (P2P, Person to Person) transactions that are not for the sale of goods or services, Add Funds transactions, Dividends paid via Debit Card cashback, or MMF from the report.
PayPal has provided some helpful FAQs at www.paypal.com/irs. For more detailed information please go to www.irs.gov and search for "IRC 6050W".
- Dustin
