Simple question about 1099s from a newbie

Hi all,

I've been lurking on the board for a while and finally signed up and joined the conversation. Thanks to all the experienced shoppers on here who are patient with us noobs. smiling smiley

I'm trying to figure out if I'm going to get any 1099s this year. I've done very occasional mystery shopping in the past (off and on for about 10 years), but never enough to receive a 1099 in any one year from any one company. That might change for me in 2015, as I've ramped up my Mystery Shopping. So, here's my question:

Do companies send 1099s whenever they send you checks for over $600 in a year (in total payments including shopping fees and reimbursement)? Or only over $600 in shopper fees (not including reimbursements)? Do all companies treat this the same, or are there different approaches from different MSCs?

I'm sorry if this has been covered already, I did a search but couldn't find the answer. Thanks in advance for your help!

Shopper in California's Bay Area

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If a company pays you $600 or more in a single calendar year AND pays you directly by check or direct deposit, then they will send you a 1099 form. The $600 is for fees, and does not include reimbursements (but keep reading). If they pay through PayPal, then PayPal has to send you a 1099 form, but the threshold is $20,000 (aggregated for all payments sent to you via PayPal). That is a change in recent years. When I started, I got 1099s even if paid through PayPal. Then it changed to a $600 (I think) threshold for all PayPal payments, and now the threshold is quite is so high that I don't get anything from PayPal. The $600 figure is an IRS requirement, and always excludes reimbursements. The PayPal requirement also comes from the IRS, and was designed to catch income from people selling things on eBay and not reporting income. Mystery shoppers ended up in the same IRS bucket, but they are really looking for eBay sellers as I understand it.

I think the threshold for PayPal issuing a 1099-K is $20,000. The issue is that PayPal has no way of knowing whether money sent to you is a fee, a reimbursement, or a payment for an item you sold on eBay. So, you need to keep good records.

Shopping Southeast Pennsylvania, Delaware above the canal, and southwestern NJ since 2008
Thanks @myst4au!

So, as I understand it, I should expect 1099 forms if either of these two situations apply to me:

1. I'll receive a 1099 from the MSC if any one MSC pays me more than $600 in fees (not reimbursement) for the calendar year; or
2. I'll receive a 1099 from Paypal if both of these criteria apply: A. I receive more than $20,000 in Paypal payments cumulative over the course of the year. And B: I receive more than 200 separate Paypal transactions over the course of the year. All Paypal payments (including but not limited to: Mystery Shopping fees, Mystery Shopping expense reimbursements, and eBay or other auction sales) count in these Paypal calculations.

That's really helpful. Thanks so much!

Shopper in California's Bay Area


Edited 1 time(s). Last edit at 07/14/2015 05:32PM by CaliGirl925.
I just found this statement from a PayPal moderator on the PayPal website: "PayPal will not deliver a 1099K though unless you have received $20,000 USD in gross payment volume from sales of goods or services in a single year AND 200 payments for goods and services in the same year. If you have not met these requirements then you would not be receiving a 1099 k from us either." [www.paypal-community.com] It is actually in response to a question from a mystery shopper. smiling smiley

Shopping Southeast Pennsylvania, Delaware above the canal, and southwestern NJ since 2008
Thanks! I've edited my post above to reflect this new information.

Shopper in California's Bay Area
In reality, it is irrelevant if you get a 1099 or not, and mostly irrelevant what the 1099 states. YOU are responsible for reporting ALL income to IRS on your tax returns whether you got a 1099 or not.

Any 1099s you receive are not likely to match your records. Take, for example, a job you do in November 2015.

If you are an accrual taxpayer you will claim the income from the November 2015 work on your 2015 tax return. If the company cuts you a check on December 31st 2015 they will include it on your 1099 for 2015 and an accrual taxpayer might have a match to the 1099 unless they also did jobs in December 2015 that were not paid until 2016. If the company does not pay for the November 2015 work until after January 1 2016, the accrual taxpayer will have no match either.

The cash taxpayer who did that job in November 2015 will not claim the income until it is received. So if the company cuts you a check on December 31st 2015, you won't receive the check until some time in 2016 so the 1099 from the company still will not match.

A company is SUPPOSED to issue a 1099 only for the fees and bonuses, not include the reimbursements. Some benighted CPAs have advised companies to 1099 for every cent disbursed to the shopper (including reimbursements) and one benighted CPA I am aware of even advised the company he works with to 1099 the charges the company paid for sending out PayPal payments.

Bottom line--look at your 1099s but don't try to reconcile to them closely. Keep good records yourself of what you receive, when you receive it and how it breaks out as to your taxable fees and your non-taxable reimbursements. A few years ago shoppers were receiving 'off the wall' 1099s from one company where perhaps they had earned $1200 in fees and $800 was paid in reimbursements, yet they got a 1099 for $20,000+. That is an obvious error that must be addressed with the company. If they had received a 1099 for anywhere between $600 and $2000 there is little point in trying to get it corrected because shopper records will document adequately what may or may not be happening with the 1099.
Thanks @Flash

I understand the importance of precise bookkeeping for my own records, but it's good to know that any 1099s I receive may not mesh exactly with my records. That's important information to have.

Shopper in California's Bay Area
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