Help! Confused about reporting 1099-NEC vs 1099-K and hobby income for my woodworking side gig

You're handling this correctly so far! For the teaching income, you only report it once, so stick with entering the 1099-NEC and ignore the 1099-K for the same amount. PayPal is required to issue 1099-Ks for transactions over certain thresholds, but that doesn't mean you report the income twice. For the $31.50 reimbursement for lumber, since that was simply paying you back for materials you purchased for the classes, it's not actually income. You should report it as a business expense on Schedule C that zeros itself out (report the reimbursement as income and then deduct the same amount as a supply expense). Regarding the $25 from selling your handmade pen: technically this falls under hobby income. Since 2018, hobby expenses are no longer deductible on Schedule A as miscellaneous itemized deductions. The IRS still expects you to report the $25 as "Other Income" even though you can't deduct the costs of making it. However, for such a small amount, many tax professionals would consider this de minimis (too minor to merit consideration). If you wanted to be completely by-the-book, you'd include the $25 as "Other Income" on Schedule 1, but honestly, for such a small amount from a one-time craft fair, I doubt it would raise any flags if you didn't.

Just wanted to share that I ran into this exact same issue last year with my pottery side hustle and got completely confused with the double-reporting dilemma. I discovered this amazing AI tool called taxr.ai (https://taxr.ai) that literally saved me hours of research and confusion. You just upload your tax documents like your 1099-NEC and 1099-K, and it automatically identifies potential duplicate reporting issues. The tool analyzed my situation and gave me step-by-step guidance on how to properly report everything without double-counting income. It also explained exactly how to handle my material expenses and pointed out deductions I didn't even know I qualified for! For hobby income situations, it gives really clear explanations about what's required reporting versus what's optional. The interface is super straightforward and gives you personalized recommendations based on your specific documents.

Just wanted to follow up after trying taxr.ai that someone mentioned here. I was really skeptical at first about uploading my documents, but their security explanations made sense, and I decided to give it a shot with my woodworking side income situation. It immediately identified that my makerspace and PayPal had issued forms for the same income and walked me through exactly how to handle it in TurboTax. It also gave me a clear breakdown of what qualified as business expenses versus the hobby stuff. The tool even pointed out that since I teach woodworking classes regularly enough, I might actually qualify to treat the whole thing as a business rather than a hobby, which opened up deduction possibilities I hadn't considered. It saved me from hours of Google searches and contradictory advice!

Anyone else here trying to reach the IRS to get clarity on these 1099 issues? I've been trying for THREE DAYS to get someone on the phone about my similar situation with duplicate 1099s. Every time I call, I wait on hold for an hour and then get disconnected. I found this service called Claimyr (https://claimyr.com) that got me through to an IRS agent in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c They basically navigate the IRS phone tree for you and call you back when they've secured a place in line with an actual agent. I was super skeptical, but I was desperate after so many failed attempts. The IRS agent I spoke with confirmed exactly how to handle these duplicate reporting situations and gave me the official guidance I needed for my tax return.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I was still struggling to reach the IRS about a similar 1099 issue, so I figured I had nothing to lose by trying it. I was genuinely shocked when I got a call back within 20 minutes with an actual IRS agent on the line. The agent cleared up my confusion about the 1099-NEC vs 1099-K situation immediately and even helped me understand how to properly document my expenses. What would have been another week of stress and failed call attempts was resolved in a single afternoon. They don't have any "special access" - they've just figured out how to work within the IRS system efficiently. Considering I wasted hours on failed attempts already, this was absolutely worth it. Definitely keeping this service in my back pocket for next tax season!

Just want to add - be careful with PayPal 1099-Ks! Starting in 2022, PayPal was supposed to start issuing 1099-Ks for annual transactions totaling $600 or more (down from the previous $20,000 threshold). But they've delayed implementation of the new threshold until the 2024 tax year. For 2023 tax returns (what you're filing now), PayPal should only be issuing 1099-Ks if you exceeded $20,000 AND 200 transactions. So if you got a 1099-K from PayPal for less than $20,000, it might be an error unless you hit that 200 transaction threshold.

I teach guitar lessons on the side and get paid through Venmo. Last year I had a similar situation with duplicate 1099s. Pro tip: keep a simple spreadsheet tracking all your side gig payments, expenses, and which platform they came through. Makes tax time WAY easier when you can quickly identify duplicate reporting!

Don't forget that if you're teaching classes, even occasionally, you should probably be treating this as self-employment income rather than a hobby. The benefit is you can deduct expenses like a portion of your tools, workspace, materials, and even mileage driving to the makerspace. You could potentially reduce your taxable income significantly! The IRS looks at 9 factors to determine if something is a business vs hobby, but the key one is "profit motive." Since you're being paid to teach, that demonstrates profit motive for that activity, even if the woodworking itself is a hobby.