We have a 1099-NEC from the employer and a 1099-K from the payment processor (PayPal) for the same payments. How do we avoid getting taxed twice on the same money?

Do both forms report proceeds that will be reported as self-employment income reported on a Schedule C Profit or Loss From Business?

If this is the case, I would create the self-employment activity and report the IRS form 1099-NEC as income reported within the self-employment activity.

In TurboTax Premier Online, report self-employment income and expenses by following these directions:

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Click on the drop down arrow to the right of Self-employment.
• Click to the right of Self-employment income and expenses.
• At the screen Tell us the type of self-employment work you do, enter the answer and click Continue.
• Establish the self-employment activity and report the income and expense.

Report the IRS form 1099-K:

• At the screen Which type of income is your 1099-K for, report the IRS form 1099-K proceeds as Other.  
• Select This amount in box 1a is too high.... and report the full amount.
• The amount in box 1a should be reported on Schedule 1 Additional Income and Adjustments to Income as an amount reported to you on form 1099-K that was included in error.

Retain all paperwork with you income tax files should a tax authority contact you at a later time.