It really does not matter what a 1099 says. What matters is that you report actual income to the tax people. So coming up with scenario after scenario is wasting time of everyone. Learn what is income. Keep your own records straight. If you get into tax trouble after trying to cheat the system it is your problem.

@sandyf wrote:

It really does not matter what a 1099 says. What matters is that you report actual income to the tax people. So coming up with scenario after scenario is wasting time of everyone. Learn what is income. Keep your own records straight. If you get into tax trouble after trying to cheat the system it is your problem.

If the IRS gets a 1099 from PayPal and your records say something else, you will have to prove to their satisfaction you're right.

I won't have to worry about this for this tax year, but in 2024, when the threshhold goes to $5k, what happens if I get a 1099K from paypal and the MSC that paid via paypal sends a 1099-nec?I will be able to figure out the overlap and file accordingly, but am I going to be contacted by the IRS a few months later telling me they have 1099s showing my self-employment income to be double what it was on my tax form.What would I do then? (no I don't pay for an accountant- I do it all myself)

The best solution is also a best practice for anyone with a small business: keep accurate record of fees and reimbursements as well as mileage and other costs of doing business YOUR records are crucial when the IRS comes calling.

That is going to be a big problem and some don't want to think will happen. You file your taxes, get a refund and months or a year later the IRS wants to audit you for the differences.

The problem is not the keeping of records. Good, honest business people keep good records, or at least they try to do that. I keep meticulous records of everything. I don't mix personal and business records. Sometimes things can be a little taxing (pun intended) because there may be some overlap between my MS business and my e-store business. For example, shared office expenses.

The problem is and will continue to be the IRS going after those good, honest people. Their records may very well be right in every aspect, but they will have to take time away from otherwise investing in their business to deal with the IRS, should they get the dreaded letter in the mail. They may even have to expend money just to prove their case.

My ex-wife and her new husband do not own a business, however, a couple of years ago they were audited because the IRS thought they lied about the number of children in their home. Combined, their annual income is around 50k per year, more or less. They did not lie about the number of children nor did they take any deductions illegally. Still, they spend the majority of a year and several thousand dollars on a tax attorney fighting back against the IRS because the IRS took their microscope out and looked at 7 years worth of tax records. If they could have gone beyond 7 years, I could have easily been dragged into the mess. Thankfully I narrowly avoided it. While I 100% stand by every year I've filed taxes, which I do myself, I would not have been happy about the wasted time and expense spent on an overbloated bureaucracy. In the end they did not owe the IRS one cent, but they were out of pocket for fighting them.

Indeed, the uni-party in congress is responsible. I'm all for them losing their jobs as well. Citizens thrive with less government and a limited government, especially at the federal level.

Edited 1 time(s). Last edit at 11/26/2023 10:57PM by ServiceAward.

@ServiceAward wrote:

The problem is not the keeping of records. Good, honest business people keep good records, or at least they try to do that. I keep meticulous records of everything. I don't mix personal and business records. Sometimes things can be a little taxing (pun intended) because there may be some overlap between my MS business and my e-store business. For example, shared office expenses.

The problem is and will continue to be the IRS going after those good, honest people. Their records may very well be right in every aspect, but they will have to take time away from otherwise investing in their business to deal with the IRS, should they get the dreaded letter in the mail. They may even have to expend money just to prove their case.

My ex-wife and her new husband do not own a business, however, a couple of years ago they were audited because the IRS thought they lied about the number of children in their home. Combined, their annual income is around 50k per year, more or less. They did not lie about the number of children nor did they take any deductions illegally. Still, they spend the majority of a year and several thousand dollars on a tax attorney fighting back against the IRS because the IRS took their microscope out and looked at 7 years worth of tax records. If they could have gone beyond 7 years, I could have easily been dragged into the mess. Thankfully I narrowly avoided it. While I 100% stand by every year I've filed taxes, which I do myself, I would not have been happy about the wasted time and expense spent on an overbloated bureaucracy. In the end they did not owe the IRS one cent, but they were out of pocket for fighting them.

Indeed, the uni-party in congress is responsible. I'm all for them losing their jobs as well. Citizens thrive with less government and a limited government, especially at the federal level.

I agree with what you said. Imagine someone who doesn't have the business skills or money to hire a tax lawyer. They would be stuck paying taxes they don't owe. This would have happened with the changes on pay apps issuing 1099's.

The IRS is well aware the 1099-K overlaps with other 1099s. They won't just say gee whiz we have to audit everyone who got both. Those who may have to worry are those whose "business* transactions on the 1099-K far exceed their other 1099 totals.

Not saying audit. I mean when you get a letter from IRS saying you made a mistake in your taxes bc they have a different amount that was reported to them

@ebit123 wrote:

Not saying audit. I mean when you get a letter from IRS saying you made a mistake in your taxes bc they have a different amount that was reported to them

Yes, I know what you are saying. I have known people who have gotten 1099s for contract work they did, or 1099s for forgiven credit card debt, and they did not report those on their taxes. They got letters from the IRS saying taxes had automatically been applied to those amounts, and they owed money. In these cases, the taxes were applied because the issuers of the 1099s used those amounts as direct deductions to their own incomes.

The 1099-Ks are different, because they only report transactions by third parties. The 1099-Ks have been around for years for many people who do enough transactions to meet the old threshholds, and we have heard no reports of people getting automatically taxed or being double taxed. It just isn't happening.

I’ve been reading news articles and some Reddit discussions of this being a possible issue, getting a 1099k and 1099nec that reports same income that is on the 1099k. I didn’t just make this up to worry about it. I got the idea of it from what I’ve been reading.
It seems to be an actual problem.

@mystery2me wrote:

@ebit123 wrote:

Not saying audit. I mean when you get a letter from IRS saying you made a mistake in your taxes bc they have a different amount that was reported to them

Yes, I know what you are saying. I have known people who have gotten 1099s for contract work they did, or 1099s for forgiven credit card debt, and they did not report those on their taxes. They got letters from the IRS saying taxes had automatically been applied to those amounts, and they owed money. In these cases, the taxes were applied because the issuers of the 1099s used those amounts as direct deductions to their own incomes.

The 1099-Ks are different, because they only report transactions by third parties. The 1099-Ks have been around for years for many people who do enough transactions to meet the old threshholds, and we have heard no reports of people getting automatically taxed or being double taxed. It just isn't happening.

I had a telephone audit one time. It was very quick and easy. They told me what they thought I owed taxes on and I explained over the phone that the capital gains or interest they thought I had earned was my original capital that I put into the account. They took a look and agreed and that was it. The whole thing took 5 minutes but not after I worried about it for a week or more.
For these paypal type 1099s they will most likely be cross-referencing the 1099 you get from the msc. When I get a payment from paypal for a msc it always includes the name of the business sending me the money. My payments can be sorted by sender. I highly doubt they will be auditing every of the thousands or millions who get a paypal or other third party payment and also one from the msc. They most likely have soft ware that will reduce the duplicate 1099 information. I know the government often has antiquated computer systems but I am betting they are ready for this challenge.

@sandyf wrote:

I had a telephone audit one time. It was very quick and easy. They told me what they thought I owed taxes on and I explained over the phone that the capital gains or interest they thought I had earned was my original capital that I put into the account. They took a look and agreed and that was it. The whole thing took 5 minutes but not after I worried about it for a week or more.
For these paypal type 1099s they will most likely be cross-referencing the 1099 you get from the msc. When I get a payment from paypal for a msc it always includes the name of the business sending me the money. My payments can be sorted by sender. I highly doubt they will be auditing every of the thousands or millions who get a paypal or other third party payment and also one from the msc. They most likely have soft ware that will reduce the duplicate 1099 information. I know the government often has antiquated computer systems but I am betting they are ready for this challenge.

A 1099 from the pay apps will not have any break down, showing reimbursements. They will just give the total paid. I don't think they will show totals from each company that sent you a 1099. The IRS will compare your 1099 totals to those the pay apps show, and they might not be the same.

Edited 1 time(s). Last edit at 11/27/2023 05:03AM by johnb974.

A lot of what's being posted here is complete nonsense. I can't go into detail about every weird and absurd remark - so let me summarize some of the facts. I prepare tax returns so I can assure you this is all accurate -

1. Mystery Shopping income is reported as Schedule C Income. It is not reported as an itemized deduction. You cannot report a "loss" as an itemized deduction.

2. You report all of your gross income from mystery shopping on your Schedule C. The reimbursements (mostly for food) are not taxable and should not be reported as income (or deducted as an expense if it is included in the 1099).

3. You should verify the income you received through the year with your 1099 but you don't NEED a 1099 to report your income. Keep track of the fees you earn, the reimbursement and your expenses. For mystery shoppers the greatest expense will likely be mileage if you are driving. I suggest tracking this all in a spreadsheet or hiring/asking a bookkeeper or return preparer to help you. Most of the MSCs will track all fees and reimbursements on their websites you can see. ALL income is taxable even if you don't get a 1099 (unless the total is under I believe $400, but this is a total not per company).

4. The IRS is NOT going after the average, honest taxpayer. You are highly unlikely to ever be audited by the IRS. They may do computerized matching to see if any 1099s reflect the gross income you report on the Schedule C. However, as long as you have reported the fees it is highly unlikely you will ever hear anything from the IRS in regard to mystery shopping. There are ancedotal stories and examples of everything, but the IRS simply does not have near enough resources to audit a significant number of tax returns. This is a fact and you can verify this by doing a simple google search.

5. In the highly unlikely event you are audited, as long as you have records they likely will not make any kind of adjustment. If they do make an adjustment it likely will be minimal, unless you have a large amount of income you are not reporting. I can't imagine too many people are going to get a significant amount of income from mystery shopping.

6. The IRS is NOT hiring 80,000 NEW agents. This is a lie that was perptuated by politicians trying to curry votes. This was a basic 10 year funding request that was mostly attrition/backfilling based hiring to bring the IRS back to their minimum staffing needs. Many of these employees are going to be hired to improve antiquated IRS technology and customer service employees. Again, there are going to be isolated examples of anything but the purpose of these employees is NOT to go after mystery shoppers or other low income people.

If you don't believe me, you can verify this with any accountant, tax preparer or IRS employee who will tell you the exact same thing.

So relax and stop with the inaccurate comments.

Edited 3 time(s). Last edit at 11/27/2023 05:51AM by HowardJuice23.

@HowardJuice23 wrote:

A lot of what's being posted here is complete nonsense. I can't go into detail about every weird and absurd remark - so let me summarize some of the facts. I prepare tax returns so I can assure you this is all accurate -

1. Mystery Shopping income is reported as Schedule C Income. It is not reported as an itemized deduction. You cannot report a "loss" as an itemized deduction.

2. You report all of your gross income from mystery shopping on your Schedule C. The reimbursements (mostly for food) are not taxable and should not be reported as income (or deducted as an expense if it is included in the 1099).

3. You should verify the income you received through the year with your 1099 but you don't NEED a 1099 to report your income. Keep track of the fees you earn, the reimbursement and your expenses. For mystery shoppers the greatest expense will likely be mileage if you are driving. I suggest tracking this all in a spreadsheet or hiring/asking a bookkeeper or return preparer to help you. Most of the MSCs will track all fees and reimbursements on their websites you can see. ALL income is taxable even if you don't get a 1099 (unless the total is under I believe $400, but this is a total not per company).

4. The IRS is NOT going after the average, honest taxpayer. You are highly unlikely to ever be audited by the IRS. They may do computerized matching to see if any 1099s reflect the gross income you report on the Schedule C. However, as long as you have reported the fees it is highly unlikely you will ever hear anything from the IRS in regard to mystery shopping. There are ancedotal stories and examples of everything, but the IRS simply does not have near enough resources to audit a significant number of tax returns. This is a fact and you can verify this by doing a simple google search.

5. In the highly unlikely event you are audited, as long as you have records they likely will not make any kind of adjustment. If they do make an adjustment it likely will be minimal, unless you have a large amount of income you are not reporting. I can't imagine too many people are going to get a significant amount of income from mystery shopping.

6. The IRS is NOT hiring 80,000 NEW agents. This is a lie that was perptuated by politicians trying to curry votes. This was a basic 10 year funding request that was mostly attrition/backfilling based hiring to bring the IRS back to their minimum staffing needs. Many of these employees are going to be hired to improve antiquated IRS technology and customer service employees. Again, there are going to be isolated examples of anything but the purpose of these employees is NOT to go after mystery shoppers or other low income people.

If you don't believe me, you can verify this with any accountant, tax preparer or IRS employee who will tell you the exact same thing.

So relax and stop with the inaccurate comments.

The only reason for making pay apps issue 1099's is to go after low income taxpayers. It's not about being fair or making everyone pay their fair share....IRS codes are not fair to begin with. They favor the rich.

The only reason for making pay apps issue 1099's is to go after low income taxpayers. It's not about being fair or making everyone pay their fair share....IRS codes are not fair to begin with. They favor the rich.[/quote]

Huh? Based on what? How is this going to cause the IRS to "go after" low income taxpayers? You are just saying things to say things with zero evidence.

As for the IRS codes not being fair and favoring the rich, you don't have any argument from me there. That isn't the IRS though, talk to your congressman about that.

It doesn't change the fact that the chance of getting audited is extremely low and the chance of any kind of major adjustment even lower.

Stop.

@HowardJuice23 wrote:

The only reason for making pay apps issue 1099's is to go after low income taxpayers. It's not about being fair or making everyone pay their fair share....IRS codes are not fair to begin with. They favor the rich.

Huh? Based on what? How is this going to cause the IRS to "go after" low income taxpayers? You are just saying things to say things with zero evidence.

As for the IRS codes not being fair and favoring the rich, you don't have any argument from me there. That isn't the IRS though, talk to your congressman about that.

It doesn't change the fact that the chance of getting audited is extremely low and the chance of any kind of major adjustment even lower.

Stop.[/quote]

People who had garage sales or mowed lawns and who took payments on pay apps did not report the income, because there was no 1099. This changed was targeted at low income people, not the rich.

@HowardJuice23 wrote:

The only reason for making pay apps issue 1099's is to go after low income taxpayers. It's not about being fair or making everyone pay their fair share....IRS codes are not fair to begin with. They favor the rich.

Huh? Based on what? How is this going to cause the IRS to "go after" low income taxpayers? You are just saying things to say things with zero evidence.

As for the IRS codes not being fair and favoring the rich, you don't have any argument from me there. That isn't the IRS though, talk to your congressman about that.

It doesn't change the fact that the chance of getting audited is extremely low and the chance of any kind of major adjustment even lower.

Stop.[/quote]

You're attempting to argue with someone who may very well be a ChatGPT bot from Grover Norquist, so we're all wasting our time. You are correct though.

@weatherman2111 wrote:

@HowardJuice23 wrote:

The only reason for making pay apps issue 1099's is to go after low income taxpayers. It's not about being fair or making everyone pay their fair share....IRS codes are not fair to begin with. They favor the rich.

Huh? Based on what? How is this going to cause the IRS to "go after" low income taxpayers? You are just saying things to say things with zero evidence.

As for the IRS codes not being fair and favoring the rich, you don't have any argument from me there. That isn't the IRS though, talk to your congressman about that.

It doesn't change the fact that the chance of getting audited is extremely low and the chance of any kind of major adjustment even lower.

Stop.

You're attempting to argue with someone who may very well be a ChatGPT bot from Grover Norquist, so we're all wasting our time. You are correct though.[/quote]

You said "Huh? Based on what? How is this going to cause the IRS to "go after" low income taxpayers? You are just saying things to say things with zero evidence."....than what was the reason for making pay apps issue 1099's? (except to track income people making income from garage sales or mowing lawns)

This is all very confusing,
If I get a 1099 from a company, ( have to pay tax) and the money is paid to me thru Pay Pal, arent I being taxed twice? Once from the company and once from Pay pal.

@Insight wrote:

This is all very confusing,
If I get a 1099 from a company, ( have to pay tax) and the money is paid to me thru Pay Pal, arent I being taxed twice? Once from the company and once from Pay pal.

No. You only have to pay tax on the income you receive less your expenses. It’s two different types of 1099s so the IRS will not think you are being paid twice. Again, keep a basic amount of records and you will be fine.

You're attempting to argue with someone who may very well be a ChatGPT bot from Grover Norquist, so we're all wasting our time. You are correct though.[/quote]

You said "Huh? Based on what? How is this going to cause the IRS to "go after" low income taxpayers? You are just saying things to say things with zero evidence."....than what was the reason for making pay apps issue 1099's? (except to track income people making income from garage sales or mowing lawns)[/quote]

Oh I’m sorry, I thought this was a mystery shopping forum. This is not going to affect mystery shoppers AT ALL because they get 1099s from the MSCs anyway.

If you want to argue about garage sales and landscapers and how they may have to pay taxes they are already LEGALLY obligated to pay IF they use a pay app, I’ll direct you to those forums. I will once again remind you these laws are passed by Congress, not the IRS.

What was the purpose of having the pay apps issue 1099's? Who does it affect the most? (Low or high income earners?)

@johnb974 wrote:

What was the purpose of having the pay apps issue 1099's? Who does it affect the most? (Low or high income earners?)

No many how many times you ask me the same irrelevant question, your going to get the same answer. Talk to your Congressman.

@HowardJuice23 wrote:

@johnb974 wrote:

What was the purpose of having the pay apps issue 1099's? Who does it affect the most? (Low or high income earners?)

No many how many times you ask me the same irrelevant question, your going to get the same answer. Talk to your Congressman.

You didn't answer the questions. Contacting any politician will not change anything. It's all about power and money. we the people have neither.

@johnb974 wrote:

@HowardJuice23 wrote:

@johnb974 wrote:

What was the purpose of having the pay apps issue 1099's? Who does it affect the most? (Low or high income earners?)

No many how many times you ask me the same irrelevant question, your going to get the same answer. Talk to your Congressman.

You didn't answer the questions. Contacting any politician will not change anything. It's all about power and money. we the people have neither.

You are right about that. But the point of my post and my intention is not to answer all your questions. I was trying to help mystery shoppers with the lies and falsehoods being presented by many in this string in regards to their taxes. No point made or any “question” you have is relevant to that. If you want to argue tax law or the fairness of the tax code that’s for another group and has nothing to do with my post

@johnb974 wrote:

What was the purpose of having the pay apps issue 1099's? Who does it affect the most? (Low or high income earners?)

Simply put, it was to raise money for the Covid stimulus plan. Yes, to increase tax collections, because due to self-imposed rules Congress had to raise money for the Covid relief instead of borrowing the money.

I suppose because more and more commerce goes online and more people work as ICs instead of as regular employees without getting 1099s and such, more taxes were going uncollected. And, yes, it probably does affect low income taxpayers more on the micro level.

@mystery2me wrote:

@johnb974 wrote:

What was the purpose of having the pay apps issue 1099's? Who does it affect the most? (Low or high income earners?)

Simply put, it was to raise money for the Covid stimulus plan. Yes, to increase tax collections, because due to self-imposed rules Congress had to raise money for the Covid relief instead of borrowing the money.

I suppose because more and more commerce goes online and more people work as ICs instead of as regular employees without getting 1099s and such, more taxes were going uncollected. And, yes, it probably does affect low income taxpayers more on the micro level.

That is true. But just to be clear, this doesn’t change anything in regard to mystery shoppers. This does not mean the IRS is going to spend more time going after mystery shoppers. MSCs have always issued 1099s. Nothing will change

Biden admin backs down on tracking bank accounts with over $600 annual transactions (from 2021)

The Biden administration on Tuesday backed down on a controversial proposal to direct the IRS to collect additional data on every bank account that sees more than $600 in annual transactions

[abcnews.go.com].

They wanted the banks to issue 1099's on bank deposits. I'm sure they will try again

@johnb974 wrote:

Biden admin backs down on tracking bank accounts with over $600 annual transactions (from 2021)

The Biden administration on Tuesday backed down on a controversial proposal to direct the IRS to collect additional data on every bank account that sees more than $600 in annual transactions

[abcnews.go.com].

They wanted the banks to issue 1099's on bank deposits. I'm sure they will try again

And that has exactly what to do with mystery shoppers now?