So, apparently Paypal wants our ssn so they can report to IRS. We don't work for Paypal. We just got paid through them which the MSCs should already report our income. Why on earth we need Paypal to report it again? This is happening in a communist ideology government when they try to take our hard earn money and keep it for themselves (big head skinny body). Don't lecture me about politics. My ancestors are Chinese. I know first hand what the communist government was/is with the actual experience. Let's keep this post about being double-taxed.

@KV wrote:

Why on earth we need Paypal to report it again?

Because it is the law -- law enacted by democratically elected members of Congress and signed by POTUS. A law necessary, because amazingly some Americans do not voluntarily report their income. A law which will not negatively impact anyone acting lawfully beyond a bit more record keeping.

@KV wrote:

This is happening in a communist ideology government when they try to take our hard earn money and keep it for themselves (big head skinny body). Don't lecture me about politics. My ancestors are Chinese. I know first hand what the communist government was/is with the actual experience. Let's keep this post about being double-taxed.

No. Just because one doesn't like something doesn't make it communistic.

China is not a communist country, nor has it or any country ever been. Corrupt socialist falsely claiming to be communistic, yes. But it is impossible for any country to be a communist country. Communism only will occur once there is a common global consciousness and artificial divisions, including states, have ceased to exist. Has this happened? Nope. Will it happen, unlikely and certainly not in our lifetimes. Communism is a utopian ordering of society. Utopian, not existing. Its an ideal type to measure against. Do not validate China's false claim to be a communist country.

Edited 1 time(s). Last edit at 06/15/2022 02:18PM by Rousseau.

We're not double-taxed.

Your reported income from mystery shopping (or any other paid-through-PayPal income generating activity) will total all monies earned from all MSCs, Therefore, the total will exceed the amount on the 1099 PayPal will send you (by the amount that is the total of all MSCs that use PayPal, plus all those you worked for during the year but did not exceed $600, plus all the MSCs you worked for that use direct deposit or mail checks).

You will NOT be taxed on the total reported by PayPal PLUS all the others.

@Rousseau wrote:

Because it is the law -- law enacted by democratically elected members of Congress and signed by POTUS. A law necessary, because amazingly some Americans do not voluntarily report their income. A law which will not negatively impact anyone acting lawfully beyond a bit more record keeping.

Agreed!

.

Edited 1 time(s). Last edit at 06/15/2022 03:50PM by Daisy Mae.

My bank requires my ssn, too, but I don't work for them. It's not a matter of who we work for, but of who is required to report our income.

Congress passes a law to make accounting and filing tax returns more time consuming and complicated only to have the IRS throw away the tax returns of 31 million people without the returns being processed.

@tstewart3 wrote:

Congress passes a law to make accounting and filing tax returns more time consuming and complicated only to have the IRS throw away the tax returns of 31 million people without the returns being processed.

Nope. Tax returns were not discarded. Information returns from payers - such as 1099s - which are typically used for "to conduct post-processing compliance matches to identify taxpayers who do not accurately report their income" - were discarded. All tax returns are processed, even the ones filled on paper. They just didn't go through as post-processing double checking efforts owing to the IRS inability to cope with the pandemic backlog of paper. Information returns which were filed electronically - which represented the vast bulk of information filings - were retained and have been and will be used to catch tax cheats.

Edited 1 time(s). Last edit at 06/17/2022 04:35AM by Rousseau.

My concern is PayPal will send you a 1099 and the MSC will send you a 1099. Someone working in the IRS may not know the difference and count your income twice.

PayPal reporting my payments from MSC's via 1099 does not bother me in the least. The MSC will also generate a 1099, and the two will offset each other. There will not be any type of 'double tax' in this situation. The problem will occur when I try to sell an item on which I have already paid tax but do not have proof of what I paid. For example, I decide to clean out my closet. I have several pairs of shoes that are still "New in the box" because I ordered them on sale, and I went overboard. I can sell those shoes for half of what I paid, and it will be reported as income. I do not have the receipts since I bought them a few years ago and originally planned to use them myself, so I will have to pay tax on selling a few pairs of shoes for less than I paid. Don't like shoes? Baseball cards that have not increased in value. Comics. Purses. Anything one can imagine that one does not have proof of what they originally paid - sell it for the same or even less than the amount paid - it will be counted as income. This does not just apply to third-party payment processors - eBay, Mercari, or any other site that allows individual sales must report over $600 in payouts on a 1099. If I am making a profit, I should have to pay tax on the difference. Absolutely. If I am losing money overall but trying to rake in a few bucks to help with rising costs, unexpected expenses, or whatever I might need - should I be taxed, or is this the definition of 'double taxed'? That is where it gets complicated in my opinion. I might decide to donate.

@johnb974 wrote:

My concern is PayPal will send you a 1099 and the MSC will send you a 1099.

They will.

@johnb974 wrote:

Someone working in the IRS may not know the difference and count your income twice.

You have to file your taxes, not the IRS, therefore the burden of proof is yours. PayPal will send a statement that lists all payments you received via PayPal (1099-K). The MSC will send a 1099-MISC showing all payouts sent to you. When you report your income to your accountant (or to TurboTax), you will not enter both amounts. The amount listed on the 1099-K should equal the amount listed on the 1099-MISC (assuming the MSC used PayPal to process your payment v/s direct deposit). You can generate an invoice on the MSC's site (if they use Sassie - use your records or their statements if they use another reporting system) and generate a PayPal activity report so that you can compare the two if it will ease your mind. I just did it before I hit "Reply" - it took less than 5 minutes.

Where do you generate an invoice on Sassie?

PayPal will send a statement that lists all payments you received via PayPal (1099-K). The MSC will send a 1099-MISC showing all payouts sent to you. When you report your income to your accountant (or to TurboTax), you will not enter both amounts. The amount listed on the 1099-K should equal the amount listed on the 1099-MISC (assuming the MSC used PayPal to process your payment v/s direct deposit).

Won't the 1099-K from Paypal show all the payments to you including reimbursements? If so, the 1009-K will not match the 1099-MISC from the MSC and will appear to overstate your income by the total amount of the reimbursements.

Lesson: keep track of all reimbursements, organized by MSC. End of sermon?

Under “My profile” if you have opted in to IC Pro

@boridi wrote:

Where do you generate an invoice on Sassie?

Edited 1 time(s). Last edit at 06/16/2022 05:09PM by patman9760.

@DRJ wrote:

Won't the 1099-K from Paypal show all the payments to you including reimbursements? If so, the 1009-K will not match the 1099-MISC from the MSC and will appear to overstate your income by the total amount of the reimbursements.

Yes it will. If you generate an invoice on Sassie, it breaks apart the fee, bonus, and reimbursement. Every company does not use Sassie though, so take the advice of @walesmaven and keep your own records.

@walesmaven wrote:

Lesson: keep track of all reimbursements, organized by MSC. End of sermon?

No, I get that, I'm just thinking that it muddles things for the IRS and could raise questions.

End of sermon.

@DRJ wrote:

@walesmaven wrote:

Lesson: keep track of all reimbursements, organized by MSC. End of sermon?

No, I get that, I'm just thinking that it muddles things for the IRS and could raise questions.

End of sermon.

It's also targeted at the poor and middle class.

@johnb974 wrote:

It's also targeted at the poor and middle class.

Somehow I doubt that a measure to target unreported income is mean to target the poor, unless they're only poor on their tax return.

Can I be so bold as to ask who was preaching said sermon? Was it me? I would generally use "You are dismissed" but can switch to "End of sermon" if the terminology is preferred.

@DRJ wrote:

Won't the 1099-K from Paypal show all the payments to you including reimbursements? If so, the 1009-K will not match the 1099-MISC from the MSC and will appear to overstate your income by the total amount of the reimbursements.

IRS has directed that income reported on 1099-K should not also be reported on 1099-NECs. Of course, some MSCs who pay via PayPal may erroneously also file 1099-NECs. While I haven't seen a formal procedure issued yet on how best to handle such duplicative reports, I would think that they will issue taypayer instructions. It might be simple as a Tax Payer created supplemental schedule to file with one's Schedule C. Regardless, same source income is not taxable and only those who are sloppy on their tax filings will pay tax on it twice.

Chill. We have ten months until 1040s are due. Maybe longer.

It was my own sermon that I was ending.

This is a huge concern of mine as well.

No matter how you slice it.. Getting A 1099 does not mean that you are going to be taxed on that money. The 1099 is just a report for the IRS.

On a similar but separate note, also notice that Venmo income is also reported to the IRS (like Paypal) - in case you are doing other gigs like Uber, Lyft, Rover, tips, etc.

I fear what is going to happen is, someone within the IRS will just combine the MSC's 1099 and PayPal's 1099 They will refuse to see the difference. They just see a 1099, no matter who sent it or why.

I'm curious, has anyone on here ever been audited? I *like* to think it would be a headache, but no real danger because I err on the side of caution. It would be such a PITA to reorganize all those receipts but i hope they would find all my filings in compliance.

Exactly, as a business owner part of your job is keeping track of your expenses and income. In no case should you rely solely on 1099's. Case in point are these "double 1099's" from PayPal. I have also gotten 1099's from mystery shop companies that included reimbursements in the total income. Flat payments will also be included on 1099's as income and it is your, or your tax person's job, to deduct reimbursable expenses from those figures using a Schedule C.
As for being contacted by the IRS, I have occasionally been contacted by the IRS due to what they thought was non reported income. With a small and quick bit of research on your part if you keep records you should be able to easily zero in on the issue and explain it to them. I have been able to do this in the past with one phone call or letter. It has never gone beyond that. There are many examples of good spreadsheets for recordkeeping on the forum.

@walesmaven wrote:

Lesson: keep track of all reimbursements, organized by MSC. End of sermon?

Edited 1 time(s). Last edit at 06/28/2022 05:08PM by sandyf.

I actually had an office audit by the IRS (the type where you show up in their office with all of your records). I was as prepared as I could be. The items they had questioned were all found in my favor. As the audit progressed, I found other items where they would owe me money. After 3 hours, the agent went to talk to his boss. They offered me a deal. If you agree that we are "even" for the tax year being audited (no one owes money either way), we won't audit your return for the next tax year (which he of course had). Even though I was sort of having fun, I accepted the offer. I had records and receipts for everything. It was a lot of work.

All of this depends on how much you made and how complicated your return is.