1099's, PayPal and the IRS

I was on a MSC website today and they had a link about a new 1099 IRS rule concerning PayPal. I clicked on the link, went to PayPal were they had the information. So, you can sign in and put 1099 in the search area of PayPal and get the information. I am wondering if this is really going to be the hassle it sounds like? Also, I needed to read about the 1099K? What do you guys think? Two hundred deposits or sells through PayPal or a certain amount of income automatically sends a 1099 from PayPal! At least that is what I understand it to read, do you?

If this is correct on my part, we must record our transactions on a spreadsheet and keep it current. I am starting with a spreadsheet but I am not current already. Bad me!

For the more experienced MS how many PayPal hits do you receive a year? I bet you hit 200 by May? It seems like every company uses the PayPal pay method. I know a few state if you take a check over PayPal then you get a fee discounted from your check.

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I'm thinking... who cares? I report all of my MS income, whether I get a 1099 or not.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.

Are you saying that theoretically you could have the same income reported on two different 1099s? You would have one from the MSC and one from PayPal? I agree that it doesn't matter what 1099s you get if you report all your income but then it could look like you are not reporting income if it is reported to the govt twice.

I know a little about this since I get all of my income from my other business through PayPal. The requirement is that you have to have 200 transactions *AND* $20,000 in payments to trigger the 1099.

I'm not quite sure why you would need to keep up with the number of transactions though? Unless you're trying to hide income and want to stay under 200 transactions? Either way, unless it has changed, both numbers have to be met in order to trigger the 1099.

There are reasons that a body stays in motion
At the moment only demons come to mind

I just checked and I have no tax document.

Sorry, I started another thread on this subject before I saw this one. I haven't read the tax code info. yet and it may answer my question.

I always report all my income but under this change does that mean if I have MSCs paying into my Paypal account and there is no tax document, I do not have to report that income that went to Paypal?

No. What happens is this. MSC's A thru Z send you a bunch of money through PayPal. Instead of each company that pays you more than $600 having to send you a 1099, PayPal sends you 1 1099 for ALL of the income you received through PayPal. The threshold for PayPal to generate a 1099 was 200 payments AND $20,000. As far as I know those numbers have not changed, but I am not a tax professional.

There are reasons that a body stays in motion
At the moment only demons come to mind

Paypal does NOT require your social
Its voluntary
In have been on paypal for 8 years
My social is not on my account

How could they report it to IRS?

You will not be able to receive payments once you hit the threshold if you don't give it to them.

There are reasons that a body stays in motion
At the moment only demons come to mind

Hi, I guess I did not explain my thinking well. I am sorry gang. I meant that could it be the income would reported by the MSC and then again by PayPal? I did not understand that it was 200 and* 20K in income. Yes, I report every penny. Many years ago I received a letter from the IRS! I had made a math error and they caught it. And, the letter informed me that I was receiving some money due to the error. I was so scared just getting a letter in the mail! Never again will I go through that!!! I just wanted clarification from someone here that knows what is going on. You are all a blessing.

Thanks everyone for the insight. I hope this makes sense. I am tired and going to bed!

Incognito

silver certified

bgriffin Wrote:
-------------------------------------------------------
> I know a little about this since I get all of my
> income from my other business through PayPal. The
> requirement is that you have to have 200
> transactions *AND* $20,000 in payments to trigger
> the 1099.
>
> I'm not quite sure why you would need to keep up
> with the number of transactions though? Unless
> you're trying to hide income and want to stay
> under 200 transactions? Either way, unless it has
> changed, both numbers have to be met in order to
> trigger the 1099.

Exactly...............it is both.

beyoden Wrote:
-------------------------------------------------------
> Are you saying that theoretically you could have
> the same income reported on two different 1099s?
> You would have one from the MSC and one from
> PayPal? I agree that it doesn't matter what 1099s
> you get if you report all your income but then it
> could look like you are not reporting income if it
> is reported to the govt twice.

The MSC'S that use Paypal will not be sending a 1099. They are no longer required to.

So you are saying that you must have 200 transactions AND made $20,000? (not "OR"

Here is what mine said when I click history: Tax year: 2013

Here are your 2013 tax documents.
Document Description

You have no 2013 tax documents.

I freaked a little bit last night and that's because I have ebay (getting rid of stuff, not a business.)

So, I downloaded the entire years worth of received monies from my MSC's and from the ebay sales.

I also claim every penny from my MSC's by keeping a log.

Then I promptly paid some more money to the IRS based on what I made from ebay. I had never sold on ebay before and then this new tax law...

I get mixed messages about this.

What is the truth?

I haven't made $20,000 or 200 transactions last year, but customer impact paid me through paypal and it is way over $600, so from what I understand, customer impact won't send me a 1099 and paypal won't be sending me one either.

I'll wait and see I guess. A few companies will be sending me my 1099 form soon I guess and I'll see if customer impact does as well.

I got an email from MCP explaining that they would not be sending a 1099 and that I should consult my Paypal annual statement for totals unless I had met the $20,000 or 200 transactions threshold. Most of my highest paying MSCs pay by check or direct deposit, but for those that use Paypal, I always note in my checkbook what is being sent to my checking account from PP and the breakdown between fees and reimbursements. Looks like that will be my most reliable record for PP funds.

Looks like deregulation aimed at simplifying small busiess reporting has helped the MSCs and shifted the recordkeeping burden to us. All the more reason to keep good records of everything, from the get-go.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.

We should also note that reimbursements, shipping charges (for Ebayers) and everything will be included in PayPal's 1099.

*****************************************************************************
The more I learn about people...the more I like my dog..

Mark Twain

I've been looking at this too. I'm going to be filing my taxes on everything, but I am wondering if this means that the IRS won't get our payment info from anyone but us? So the burden is 100% on small business to get it right.

I may have 200 transaction in my account, but not $20,000. As of now I do not have a tax document.

On that note, is anyone using Outright for record keeping as recommended by paypal? I am thinking about signing up.

So I want to see if I understand the situation. None of this applies to me yet but this year I will certainly make over $20,000 if all goes according to plan. (ha)

In 2012 Sally made $650 from Strange Planet MSC and recieved a 1099 from them.

In 2013 Sally made $19,200 from Strange Planet which pays through Paypal and did not get a 1099.

In 2013 her twin, Tilly made $10,000 from Mars MSC and 10,000 from Venus MSC which both pay through Paypal, and triggered the 1099 rule so Paypal issued the 1099.

Is this correct?

Meanwhile, back here on Earth poor pony123lucy got a computer infection by trying to download a free PDF writer (through CNET
which she thought was safe) and had to pay McAfee $70 to fix it. The only reason she wanted a PDF writer was for mystery shopping. Can she use this as a business expense?

Wow! Pony123lucy too much deep thinking for me. Sounds like those word problems I did not do so well on in Math class. However, SunnyDays2 voiced my feelings on it perfectly. I do the right thing where my Mystery Shopping income is concerned. But since I have a disabled husband to care for I cannot work other than my mystery shopping. Therefore, sometimes I clean out the closet to do the postal shops and make a little extra on Ebay. I do not think I should have to pay taxes on that but according to this someday I may have to. For now I am safe as I don't make a 10th of the $20,000 needed but who knows when that amount might change.

pony, maybe, maybe not. If Mars and Venus together paid Tilly $20,000 in 200 transactions, then yes she would get a 1099. If they each paid her once a month (24 transactions), then no she would not.

There are reasons that a body stays in motion
At the moment only demons come to mind

Avon, regarding the items from your home that you're selling on Ebay, you have a cost involved in those items if you purchased them. Check this out for yourself at IRS.gov or your tax person, but my understanding is that if you sell an item for less than you paid for it plus your cost to sell it, you have no net gain from the sale of that item. Only a net gain would be taxable.
Therefore, since you are selling personal items you no longer use, you probably don't have a net gain.

Mary Davis Nowell. Based close to Fort Worth. Shopping Interstate 20 east and west, Interstate 35 north and south.

Thanks! Never thought of that, it does make me feel better. I guess more bookeeping is in order.

Okay, this is a concern ;

Let's take Sinclair. You have two colums in Pay History. One is for fees and one is for "specials"...which are reimbursements. Sinclair says report this column #1 one "fees" but do not report "specials."

But yet, paypal is going to give BOTH to the IRS, which makes us look like we got MORE.

Help!

Keep up with all your fees and reimbursements and add together for a grand total for income. Subtract your reimbursements as an expense of doing the jobs along with all your other expenses and you have your net income. It all goes back to keeping adequate records.

Mary Davis Nowell. Based close to Fort Worth. Shopping Interstate 20 east and west, Interstate 35 north and south.

MDavisnowell Wrote:
-------------------------------------------------------
> Keep up with all your fees and reimbursements and
> add together for a grand total for income.
> Subtract your reimbursements as an expense of
> doing the jobs along with all your other expenses
> and you have your net income. It all goes back to
> keeping adequate records.

Thank you!

Also, if you're selling your old stuff to recoup some of the fees rather than as a business, it's not taxable income. For example, I resell my children's clothes when they outgrow them. I do not make a profit (sell for less than I paid) and do not need to pay taxes on those fees. It's complicated for me though since I use Paypal for that in addition to MS shopping. I'm going to have to separate it all out.

And of course, you could be well under 20,000 in actual income but get there via reimbursements.

Pony, I would take that as a business expense, absolutely!

It seems I have opened a can of worms, so to speak. However, this is what I mean. This can be rather confusing to some of us. I plan on reporting every penny. But, I want to make sure I am recording everything right.

Now, since this is my only income and I go to do my 1040 what do I report as my employment title? Are we supposed to be something else than "mystery shoppers" ie: incognito? So, what do y'all put on your return as your job title?

Incognito

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Ive only been told by MCP that they will be using this as an excuse to not send out 1099s. Not that I care because ive only made about $100 off them last year. But it seems like theyre wrong. Paypal has been required since at least 2011 to do this according to their forums. However, they state for the sale of goods or services. I dont know about you guys but I dont sell my services to these companies. I dont set my rates. It all seems fishy. If it were me, id be calling the irs and asking personally if this is legitimate. If not, I would gladly hand them the company's info.

no you will not get a 1099 from the MSC and Paypal. If the MSC uses Paypal then Paypal will give you the 1099. Like walesmaven said I declare everything anyway so it makes no difference to me.

Ok...so I do not have a 2013 tax document in my Paypal account.

Therefore I am to report the income I earned on my own, using my math calculations....what do we use as proof of earning that income if we don't get a 1099? Do they just take our word for it? I do keep great records of every cent earned so I know what to report, but how do THEY know?

ShopperShel

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1099's, PayPal and the IRS

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