Taxes

That is Form 1040-V and yes, you need one to send with your check.

@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

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More About Mystery Shopping Taxes

I have only one question on taxes. Schedule C (or C-EZ) asks for the business or profession code on line B. What do you use for mystery shopper?

The is a code for misc, I think. I use the code for consulting.

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.

The code used on my form by tax preparers in the past has been 9999999 (or as many 9s as required).

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 info 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.

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.

@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.

Thanks Cease, that is what I will do in the end but just thought perhaps I was looking in the wrong place. The msc told me that I should look at the tax code with the IRS for third party payments. The company I am dealing with is Customer Service Experts and I do airport jobs thru them. Each time I do one my pay is somewhere between $130 and $150 pure income. I usually do 2 of these a month so it adds up $$ wise but I have no where near 200 separate payments from PayPal so they do not need to generate a 1099. . It seems to me the IRS wants 1099's over $600 in order to curtail fraud by taxpayers not reporting all their income. It seems that this is counter intuitive for the IRS to require a minimum pay of $600 but for Paypal payments the minimum pay required to be reported to them by the employer/third party is way way above that. I am not a cheater but I could see how one could easily cheat the IRS this way. It seems so illogical. Whenever I see something that is illogical I always question it. Yes, I am a nerd through and through!

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.

@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.

CSE? They are wrong. Eventually, they’ll get caught. Basically they would have to be correct and every other mystery shopping company that pays by PayPal is incorrect.

Edited 1 time(s). Last edit at 02/25/2019 09:39PM by SoCalMama.

Mama, I just read part of what the IRS says and it seems to be only if the third party is responsible for deducting taxes and deciding payment issues which it seems it is not with CSE. My scheduler told me she started working there in 2017 and they handled the situation the same way that year too. I don't know how long CSE has been in business as I did not work for them before 2017....I may not have noticed not getting a 1099 for 2017 because I do up my own spreadsheet for mystery shopping reporting purposes but hopefully if and when CSE does get into trouble I sure hope it does not trigger a tax audit for all their contractors.

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.

Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008

That's what I thought.

@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.

Actually.
The exact amounts aren't listed, but let's try these numbers.

$4500 Gross for the year
$4000 reimbursements (not taxable)
$500 fees (taxable)

How much are we talking about deducting against $500 a year? If you deduct more than $500 in expenses, you have a hobby. You can take a loss a couple of times (not an exact science), but you can't take a loss every year. That's when your "job" is a hobby.

Nobody is suggesting paying taxes on $4000, are they?

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.

Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008

@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.

I 100% agree with this summary.

And I think that the issue is the "rule of thumb is to make a profit at least 50% of the time on a rolling 5-year basis". For this reason, the accountant is calling it a hobby because they see no intent to make a profit. When expenses exceed the fees, it is a hobby.

No I definitely paid taxes on all of it because of the way she filed it as a hobby.

@nolimitem wrote:

No I definitely paid taxes on all of it because of the way she filed it as a hobby.

Then, you need to file an amendment.

Yes, in this instance, you need to file an amended return.

Frankly, your tax preparer was wrong.

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.

Yes I agree with SoCalMama. The amended return would list the 1099 on the proper form (C)and then list the deductions. You would not just change the amount of earnings to $400. Two years ago I had to make a change to my taxes the day after they were filed. Because it was still before the filing date when I asked for the change my tax preparer just filed a new form and wrote corrected on top rather than an amended form. It all worked out in the end but it took the IRS and the state 8 months to figure out they had two forms from me. They kept sending me bills for the money I owed from the first incorrect form. My tax preparer called them and spoke to them and he said they said to ignore all the notices but that at the IRS one hand has no idea what they other is doing and my two forms would eventually be in the same place. As predicted that is what happened and sometime during the next summer I received a notice that all was well. Maybe an amended form would have worked faster. But just be forewarned that the IRS has issues putting all the pieces together in one place when there is more than one piece. Try to be calm and carry on if this happens to you.

I totally agree.

@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.

Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008

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