@plmccut wrote:
It seemed to me that the one year I had to pay, TTax generated a receipt/form to use when sending the payment to IRS
@ceasesmith wrote:
Hi, Sandy
Just rely on your own bookkeeping. You are 100% correct about PayPal.
Wow. That MSC is messing up big time! It doesn't matter HOW they pay you, if they pay you more than $600, they MUST send a 1099. It's the LAW.
However, your responsibility is to report all the income you earned, so relying on your own bookkeeping is just fine.
@sandyf wrote:
Rather than start a new topic I am asking this "other" tax question here. If I should start a new thread let me know. This question is about a lack of a 1099 from Pay Pal.
In 2018 I earned much much more than $600 for a company that pays thru PayPal. When I called the msc they told me to look at PayPal for tax infor. I really do not understand what PayPal says about this but it looks as though they only send something when there are at least 200 transactions in a year which I have not had. I can figure out what I owe to the IRS myself from my own book keeping method but it did not seem like I could easily get the information fo I need from Paypal. They do not seem to separate out reimbursements at all and they do not treat each company as a separate entity. So is there some way all of you handle the payments through PayPal? Am I missing something? I do not mind not having the 1099 but it seems to me the IRS would be wanting this information sent to them from my employer. If anyone can explain how this works let me know.
@nolimitem wrote:
I guess my issue is how I'm taxed on it. So she claimed $4000+ in hobby income. All but a few hundred of that was reimbursements. Here some claim you ignore your reimbursement. Her response was they were deductible as hobby income.
@myst4au wrote:
That is not correct. You are running a business not a hobby. Expenses are deductible for a business. They are not deductible for a hobby. You are paying 25% (depends on your marginal tax rate) on the reimbursements. So, at 25%, you have handed the IRS $1000 that you do not owe them if most of the $4000+ is for reimbursemetns.@nolimitem wrote:
I guess my issue is how I'm taxed on it. So she claimed $4000+ in hobby income. All but a few hundred of that was reimbursements. Here some claim you ignore your reimbursement. Her response was they were deductible as hobby income.
@myst4au wrote:
SCM - my understanding is that the OP's tax preparer told them to pay taxes on the total $4500 gross amount. That is ridiculous. The $400 in reimbursements are simply not taxable. I essentially told the OP to deduct the $4000, and pay taxes on the remaining $500.
It is possible that the OP incurred expenses such as mileage that would further reduce the $500. I agree that if the expenses were, say $700, then for the year, the OP would incur a loss. Generally, and I emphasize generally, the IRS requires an intent to make a profit. I have read that they rule of thumb is to make a profit at least 50% of the time on a rolling 5-year basis.
If this were to be an issue for the OP, then don't claim any expenses pay taxes on the $500. but to pay taxes on the full $4500 is just absurd.
Then, you need to file an amendment.@nolimitem wrote:
No I definitely paid taxes on all of it because of the way she filed it as a hobby.
@SoCalMama wrote:
Actually if OP has 1099’s totaling $4500, that’s what they report. Then required purchases of $4000 are listed as a deduction and earnings are still $500.
That’s how my CPA handled it when Ipsos sent a 1099 with the gross amount then sent a corrected 1099 with the net amount. He said if the IRS “sees” the larger amount and you don’t report it, you’ll likely get audited, which is just a hassle.