They take your word for it. Unless you get audited.

The rule is $20,000 AND 200 paypal transactions for PayPal to generate 1099K

Remember that the companies can also get audited and even if they did not send you a 1099, they have record keeping of who received checks.

ShopperShel Wrote:
-------------------------------------------------------
> 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?

"They" are just thrilled to death that we are honest and report our earnings but they have no way to know the earnings. "They" are probably a computer and technically can't "care" about anything. But they will cash our check.

ShopperShel Wrote:
-------------------------------------------------------
> 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?


A company sends you a 1099 if you make over 600 with them. Regardless of what you make, they still have to report the information to the IRS, otherwise it will look like a profit on their end. Think of child care. If I pay someone $200 over the course of a year to occasionally watch my kids I can report it on my taxes, giving me a bigger tax break. As for how you are supposed to report less than $600 I cant say, ive been doing my taxes for 8 years (6 involving mystery shopping) but ive always done it online. I dont see any of the extra forms, only the final report.

SInce we won't be getting 1099's how do we find the company's EIN? Do you report it all as one lump sum or do you list each MSC? I started preparing mine today with Turbo Tax, but they want the EIN for each company and I don't have them. I wasn't planning on filing today anyway, just trying to get a start on doing it.

FYI, some of the MSCs who use paypal are still sending out 1099s. I just got one from Melinda Brody today.

So maybe it is just MCP that's not sending the 1099s if you make over $600 (they are my biggest money earning company by far).

Are personal payments that I receive counted in the total that will be reported to the IRS?
No. Personal payments that are not payments for the sale of goods or services will not be counted when determining if the IRS thresholds have been reached and will not be included on your Form 1099-K if you exceed the thresholds. However, all payments received for the sale of goods or services will be used to calculate the gross payment volume to be reported. PayPal monitors accounts to ensure that personal payments are not being used for sales of goods and services.


Wouldn't payments from an MSC be counted as personal payments?

As required by IRC 6050W, the $20,000 will be calculated by looking at a seller’s gross payment volume for sales of goods or services. Gross amount means that any adjustments for credits, cash equivalents, discounts, fees, refunded amounts or any other amounts will not be netted out.

If I am understanding this right, this only pertains to people that are selling stuff and not payments from an MSC. So regardless of how much we have made we will not get a 1099 from Paypal.

We are the sellers of services that the regs refer to, I think.

walesmaven Wrote:
-------------------------------------------------------
> We are the sellers of services that the regs refer
> to, I think.


Sellers of services.....sounds naughty!

This is a good conversation. I will get the forms downloaded and look them over. I would love to see what they have to say since it has been some time since I have filled these forms out.

You don't need the EIN of a company if they didn't pay you over $600. This would just be reported under "general business income" without a 1099 and there is a spot for it.

"Did you have income for which you have not received a 1099?"

If you receive something from Paypal it will be a 1099K and this "general business income" is where you would report this as well.



Edited 1 time(s). Last edit at 01/25/2014 05:35AM by Kathee70.

I talked to a tax professional about this yesterday. She said it is the responsibility of the MSC to send out the 1099 not PayPal's. There's quite a lot of confusion about this, maybe I will call the IRS and ask them if I get a chance too.

You don't need the 1099; the IRS does so it can tell if you under report income. You will get one if you made more than $600 from any one company, but you don't have to list it individually on the tax return. Tax software will allow you to do it, but the IRS isn't going to look to see if you reported them all; all they do is say, "She got $4500 in 1099's and there is $4772 in income on her tax return so we're happy." On the other hand if they get $4500 in 1099's for you and you only report $3750 because you subtracted out your reimbursements, you will get a letter from the IRS saying you under-reported your income by $750 and sending you a bill for additional tax. Then you get to explain to them that the reimbursement part isn't taxable and they'll tell you that you need to deduct it as an expense instead of under-reporting income.

I have clients who receive literally dozens of 1099's in a year and believe me, I do not enter those individually on the tax return. The ability to enter them in the tax software is just to make it easier to get the math right on the return. If you know what your total receipts are for the year, put that on the Schedule C and don't worry about the 1099's. Just make sure your "total receipts" is at least as much as the 1099's and if it isn't, you might need to do a better job of tracking what you got.

Whew!! Great topic..especially for me as a new MS...I have a LOT of questions and don't know where to start!! If there's anyone who would be interested in "mentoring" me a little bit, I could really use the support. Please PM me and I will send you my info. Happy shopping!!

I'm thinking of taking a tax prep shop and I know I only need to give a total of the MSC income but what do I call it when I give the info. to the tax preparer? Certainly I don't want to say it's mystery shopping income.

market research?

I do a lot of audits so I just put auditor.

Here is another thread about this [www.mysteryshopforum.com]

I particularly like what mrcomputer101 calls himself (tour guide for the planet Zoltar)

I, however, just use mystery shopper.