MicrostockGroup
Agency Based Discussion => Adobe Stock => Topic started by: marthamarks on February 20, 2014, 11:39
-
Dear Fotolia,
On Feb 16, I contacted you via your website to say that I had received TWO copies of the 1099-MISC tax form (US) for 2013, each one showing (incorrectly!) that I was paid $12.50 last year. Two days later, I received a THIRD copy of the same 1099 form.
Nothing is different on any of those forms, except the third one has the CORRECTED box checked and hand written on it is this: "issued on 2-7-14". Once again, on Feb 18, I contacted you via your website. So far, I've had no response from you.
Receiving three separate/identical 1099 forms for one tax year would be odd enough but...
I received no payment whatsoever from Fotolia in 2013. Certainly not $12.50, as shown on those three 1099 forms, because that wouldn't have been enough to make payout. I didn't receive a single penny from Fotolia in 2013. So why is the IRS being notified that I received payment of $12.50 last year???
Several weeks ago, in 2014, I cancelled my Fotolia account, leaving about $12.50 unpaid to me. Frankly, I didn't expect ever to receive that. I was willing to let you keep that money. But for sure, I didn't expect to have a non-existent payment reported to the IRS for a year when I never received any money from you.
What kind of crazy, mixed-up company are you? Please explain what's going on.
Martha Marks
-
I can answer a part of this. The first 1099 probably showed (if it was like mine) "Non employee compensation" as the type of income. The corrected one shows "Royalties" which I think is the correct category.
On your second question - I just looked at mine. I have actually been paid out $728 (yes, bragging again) whereas my 1099 is for $982, so they are obviously reporting the royalty earnings in the year rather than what they have paid out (which could cover multiple tax years if you ask for a payout in January).
Steve
-
I can answer a part of this. The first 1099 probably showed (if it was like mine) "Non employee compensation" as the type of income. The corrected one shows "Royalties" which I think is the correct category.
Thanks for that, Steve. I just looked again and yes, the amount was placed in the wrong spot on the first two forms I received. So that at least explains the correction made in the 3rd form I received.
On your second question - I just looked at mine. I have actually been paid out $728 (yes, bragging again) whereas my 1099 is for $982, so they are obviously reporting the royalty earnings in the year rather than what they have paid out (which could cover multiple tax years if you ask for a payout in January).
Brag away, Steve. I would too if I'd earned that much from FT!
But I still don't understand why I should get a tax form for 2013 when I received no income from FT that year. If the $12.50 being reported will actually be paid to me in 2014 (which hasn't happened yet, BTW), can I be sure I'll get no 1099 for that same payout in 2015?
This is about a piddly bit of money, obviously, but it doesn't make sense on its face. None of my other agencies does it this way.
Thanks anyway, for your explanation. I understand half of it, but the other half is still confusing.
-
I also received two 1099s from them both with their warped commissions. And it was this way last year and the year before.
-
Hi Martha
I think the answer is that they are working on what you have earned from licensing images via them in the tax year. They will be reporting their own company accounts in the same way - ie every sale from midnight on 1 Jan to midnight on 31 Dec will count as income, and your share needs to be accounted for. Cash payments in and out are something different and are accounted for in their balance sheet (I think) which tracks cash movements over the year. So they are reporting your income as seen by them. The fact that you haven't been paid it in cash is neither here nor there in that accounting treatment.
Most of us work on a cash basis - ie we track money in and out. This is a valid way of accounting for a small business. However with a 1099 around, you need to be reporting what the 1099 says, I think, to avoid issues.
Steve
-
I also received two 1099s from them both with their warped commissions. And it was this way last year and the year before.
That's interesting to know. I only signed up w/FT last June so I have a very short history with them.
I was shocked last June to find FT only accepted 18% of the images I uploaded to them, when my acceptance level is 68% at DT and around 85% at SS and Veer. Sales were obviously low on that tiny FT inventory of less than 300 images, and after FT launched its "Dollar Club", I decided to look for the exit. Wasn't expecting to see any payment whatsoever, as I said in my letter, so it was a genuine surprise to find any payment reported, much less to have it reported for last year.
I'll wait and see what I hear back from FT... or from Mat who seems to speak for them on this forum.
-
Cash payments in and out are something different and are accounted for in their balance sheet (I think) which tracks cash movements over the year. So they are reporting your income as seen by them. The fact that you haven't been paid it in cash is neither here nor there in that accounting treatment.
Most of us work on a cash basis - ie we track money in and out. This is a valid way of accounting for a small business. However with a 1099 around, you need to be reporting what the 1099 says, I think, to avoid issues.
Thanks again, Steve. I understand what you're saying now.
My own taxes are being prepared even as we speak... even though I keep getting new 1099 forms from FT. So I guess that piddly $12.50 will be added to my income for 2013, even though I still haven't seen it.
'Twill be interesting to note when that cash payment actually comes in, assuming it does. I'll update this thread when that happens.
-
I report the money I actually receive on my taxes, not the 1099 amount (if it does not match). I do inform my accountant of both amounts, but the actual amount received is used. This is a valid way to do this according to my accountant. Talk to your accountant.
-
The reason Fotolia does this is:
1) They cannot read instructions correctly for the 1099
2) They take the position that the money is available for you to SPEND on images at their website which is why they report it as cash that you have received (which is incorrect per the instructions on the 1099)
One of the reasons I no longer do business with Fotolia.
-
I report the money I actually receive on my taxes, not the 1099 amount (if it does not match). I do inform my accountant of both amounts, but the actual amount received is used. This is a valid way to do this according to my accountant. Talk to your accountant.
Sounds like you're a pretty smart guy, Packerguy. :D
I will mention this to my accountant, although either way, $12.50 ain't gonna make much difference to my taxes. But... it's the thought that counts!
-
The reason Fotolia does this is:
1) They cannot read instructions correctly for the 1099
2) They take the position that the money is available for you to SPEND on images at their website which is why they report it as cash that you have received (which is incorrect per the instructions on the 1099)
One of the reasons I no longer do business with Fotolia.
Yup. Sounds like yet another great reason for me to be out of business with FT!
-
FYI, I just got the following message from FT. I have sent them my PP address, so we'll see.
Hi Martha,
Fotolia is required to issue a 1099 for earnings regardless if you cashed it out or not. I understand you closed your account. If you forward me your Paypal address I can schedule a payment to be made ASAP.
Sincerely,
Chad Bridwell
Director of Operations
Fotolia.com
-
Keep in mind that 1099's are for earnings, not necessarily payments. If you earned $12.50 last year you should get a 1099 saying so.
I report to IRS what I earned in any year, whether it has been paid out or not. Since not all agencies send 1099s I have used this method and it works because my earnings are always more than the 1099s I actually receive.
1099s will not always match either earnings or payments. SS for instance uses the date of payment (often the 15th) as the month in which something was earned. So for 2013 they reported my December 2012 earnings but not my December 2013 since those were both paid in January of the following year. In SS case earnings in any month = payments because I make payout each month but at other agencies this is not so and then earnings might take months or years before turning into payments.
Note that this is how I do it, it is also completely valid to work on a cash basis and only declare what money you actually received. As long as you are consistent IRS does not care. YMMV.
-
But be careful, you can only use the cash method if your average for the last 3 years was less than $1 million. I'm still somewhat under that threshold
-
But be careful, you can only use the cash method if your average for the last 3 years was less than $1 million. I'm still somewhat under that threshold
Yep, I'm kinda, sorta under that threshold too. :(
-
Quite frankly, that is false. In the U.S., we are cash basis taxpayers which means that we pay tax when cash is IN HAND. I had this argument with Chad directly and even though I have over 20 years in the tax industry - both in public accounting and in private industry, he refused to even consider anything else. If you read the instructions to Form 1099 it states:
"File Form 1099-MISC, Miscellaneous Income, for each
person to whom you have paid during the year:
At least $10 in royalties (see the instructions for box 2) or
broker payments in lieu of dividends or tax-exempt interest
(see the instructions for box 8 );"
If they haven't PAID YOU then they shouldn't be reporting it as being PAID TO YOU.
The thing that Chad didn't tell you (as he didn't tell me) is that if you receive payment prior to receiving the payout amount, they charge a fee. Naturally, since they've already reported the earnings (that you didn't receive), your earnings will be overstated by the fee they charge their contributors who wish to cash out before meeting the payout threshold.
Yes, it's an unethical practice and it's bad business.
FYI, I just got the following message from FT. I have sent them my PP address, so we'll see.
Hi Martha,
Fotolia is required to issue a 1099 for earnings regardless if you cashed it out or not. I understand you closed your account. If you forward me your Paypal address I can schedule a payment to be made ASAP.
Sincerely,
Chad Bridwell
Director of Operations
Fotolia.com
-
I mostly ignore 1099s. I don't care what these companies claim to have paid me. I know what I received, so that's what I report. 1099s are kind of a joke really.
PayPal gives them out, which is still mystifying to me. PayPal doesn't pay me. Shutterstock, Fotolia, Dreamstime, etc., they pay me. PayPal is just the means through which payment is made. No idea how PayPal reports having paid me anything. So I just ignore the 1099. I seriously never even look at it.
-
FYI, I just got the following message from FT. I have sent them my PP address, so we'll see.
Hi Martha,
Fotolia is required to issue a 1099 for earnings regardless if you cashed it out or not. I understand you closed your account. If you forward me your Paypal address I can schedule a payment to be made ASAP.
Sincerely,
Chad Bridwell
Director of Operations
Fotolia.com
Good to hear you will at least be paid. I have only gotten two 1099s from them. The first and the corrected one. Hopefully that's it, since we are seeing the accountant soon.
-
I mostly ignore 1099s. I don't care what these companies claim to have paid me. I know what I received, so that's what I report. 1099s are kind of a joke really.
PayPal gives them out, which is still mystifying to me. PayPal doesn't pay me. Shutterstock, Fotolia, Dreamstime, etc., they pay me. PayPal is just the means through which payment is made. No idea how PayPal reports having paid me anything. So I just ignore the 1099. I seriously never even look at it.
You're braver than me. I always pay attention to the 1099s, since thats the amount that has been reported to the IRS. If there's any discrepency between my numbers and the 1099 number, I want to get to the bottom of it.
-
If they haven't PAID YOU then they shouldn't be reporting it as being PAID TO YOU.
That's my thinking too, Ed. Thanks for your knowledgeable input on this.
To Fotolia: You shouldn't tell the IRS you paid a supplier in a given year if you didn't actually pay them in that year... and especially if you're not planning to pay them the full amount you've already reported to the IRS.
Geez.
None of this has improved my opinion of Fotolia. I'm happy to be done with them.
-
Thanks, Lisa and Mike, for your input, too!
-
What Fotolia says doesn't make any sense. If it was what they claimed you earned vs. what you have been paid, then they could claim you earned a million dollars through some accounting error. Even though you haven't been paid the million dollars you'd theoretically owe taxes on it. Then later they could go "oops" and claw back the balance. Meanwhile the IRS sends you a bill for a couple hundred thousand dollars in back taxes.
-
What Fotolia says doesn't make any sense. If it was what they claimed you earned vs. what you have been paid, then they could claim you earned a million dollars through some accounting error. Even though you haven't been paid the million dollars you'd theoretically owe taxes on it. Then later they could go "oops" and claw back the balance. Meanwhile the IRS sends you a bill for a couple hundred thousand dollars in back taxes.
Exactly right, Comfort Eagle. It makes no sense whatsoever, and the poor photographer is left entirely at their mercy.
Who needs this ^@#& ?
-
I mostly ignore 1099s. I don't care what these companies claim to have paid me. I know what I received, so that's what I report. 1099s are kind of a joke really.
PayPal gives them out, which is still mystifying to me. PayPal doesn't pay me. Shutterstock, Fotolia, Dreamstime, etc., they pay me. PayPal is just the means through which payment is made. No idea how PayPal reports having paid me anything. So I just ignore the 1099. I seriously never even look at it.
You're braver than me. I always pay attention to the 1099s, since thats the amount that has been reported to the IRS. If there's any discrepency between my numbers and the 1099 number, I want to get to the bottom of it.
if all your income is reported thru 1099s, then there could be questions if you report income less than the 1099 total; but as others have said, if you work on a cash basis, those numbers don't have to match up.
if you have non 1099 income - eg, direct sales, ebay, amazon, etc, then your 1099 forms will be well under your total income reported. as others have said - I just file the 1099's, but don't use them in actual tax preparation
-
I mostly ignore 1099s. I don't care what these companies claim to have paid me. I know what I received, so that's what I report. 1099s are kind of a joke really.
PayPal gives them out, which is still mystifying to me. PayPal doesn't pay me. Shutterstock, Fotolia, Dreamstime, etc., they pay me. PayPal is just the means through which payment is made. No idea how PayPal reports having paid me anything. So I just ignore the 1099. I seriously never even look at it.
You're braver than me. I always pay attention to the 1099s, since thats the amount that has been reported to the IRS. If there's any discrepency between my numbers and the 1099 number, I want to get to the bottom of it.
if all your income is reported thru 1099s, then there could be questions if you report income less than the 1099 total; but as others have said, if you work on a cash basis, those numbers don't have to match up.
if you have non 1099 income - eg, direct sales, ebay, amazon, etc, then your 1099 forms will be well under your total income reported. as others have said - I just file the 1099's, but don't use them in actual tax preparation
I do have income other than shown on 1099s, of course, but still want to receive 1099s that are accurate. Particularly last year when I also got 1099s from Paypal, which were redundant of some of the microstock ones.
It just seems to me to be good accounting to make sure everything is reported accurately, and AFAIK you have to mail in the 1099s with your tax return (or separately if you e-file). Has my accountant misinformed me? Do you not have to send in the 1099s to the IRS when you do your taxes?
-
I mostly ignore 1099s. I don't care what these companies claim to have paid me. I know what I received, so that's what I report. 1099s are kind of a joke really.
PayPal gives them out, which is still mystifying to me. PayPal doesn't pay me. Shutterstock, Fotolia, Dreamstime, etc., they pay me. PayPal is just the means through which payment is made. No idea how PayPal reports having paid me anything. So I just ignore the 1099. I seriously never even look at it.
You're braver than me. I always pay attention to the 1099s, since thats the amount that has been reported to the IRS. If there's any discrepency between my numbers and the 1099 number, I want to get to the bottom of it.
if all your income is reported thru 1099s, then there could be questions if you report income less than the 1099 total; but as others have said, if you work on a cash basis, those numbers don't have to match up.
if you have non 1099 income - eg, direct sales, ebay, amazon, etc, then your 1099 forms will be well under your total income reported. as others have said - I just file the 1099's, but don't use them in actual tax preparation
I do have income other than shown on 1099s, of course, but still want to receive 1099s that are accurate. Particularly last year when I also got 1099s from Paypal, which were redundant of some of the microstock ones.
It just seems to me to be good accounting to make sure everything is reported accurately, and AFAIK you have to mail in the 1099s with your tax return (or separately if you e-file). Has my accountant misinformed me? Do you not have to send in the 1099s to the IRS when you do your taxes?
I believe that the agencies already do that, Lisa. And your tax return should itemize each agency separately and show their 1099 amount. That's how mine work, anyway. A couple of years ago, Dreamstime put my income in the wrong box on my 1099 and my accountant put it in the right box. IRS saw the discrepancy and BAM!. The IRS audited me. While it was eventually resolved, we never mailed 1099's to the IRS, the agencies do in some way. You just need to make sure each 1099 is identified on your return individually so they can verify you are claiming that specific income.
-
I believe that the agencies already do that, Lisa. And your tax return should itemize each agency separately and show their 1099 amount. That's how mine work, anyway. A couple of years ago, Dreamstime put my income in the wrong box on my 1099 and my accountant put it in the right box. IRS saw the discrepancy and BAM!. The IRS audited me. While it was eventually resolved, we never mailed 1099's to the IRS, the agencies do in some way. You just need to make sure each 1099 is identified on your return individually so they can verify you are claiming that specific income.
Thanks for the detailed explanation. Sounds like you are kind of proving my original point about having your own reported income from the agencies match the 1099s exactly (or else the audit, like you experienced).
-
I believe that the agencies already do that, Lisa. And your tax return should itemize each agency separately and show their 1099 amount. That's how mine work, anyway. A couple of years ago, Dreamstime put my income in the wrong box on my 1099 and my accountant put it in the right box. IRS saw the discrepancy and BAM!. The IRS audited me. While it was eventually resolved, we never mailed 1099's to the IRS, the agencies do in some way. You just need to make sure each 1099 is identified on your return individually so they can verify you are claiming that specific income.
Thanks for the detailed explanation. Sounds like you are kind of proving my original point about having your own reported income from the agencies match the 1099s exactly (or else the audit, like you experienced).
Yea I put on the amount that's listed on the 1099. I just think it's safer that way.
-
I wanted to get back to the root of this thread. Here in the U.S. if you earn money by working in Dec. of one year, but do not receive that money (either as a credit on your bank statement or as cash in hand) until the next year, that income (money) is reported for the year in which you receive the income, not in the year in which you earned it.
Based on that principal, if Fotolia is reporting that I "earned" income in a particular year, but I have not "received" that income in the form of cash or as an addition to my bank statement, than Fotolia is making an error in it's tax reporting.
If Fotolia is incorrectly reporting payouts of contributors, then they will be the ones in trouble with the tax authority (IRS).
Fotolia is going to get shut down because they are misreporting contributor's earnings. It may take a few years, but the IRS is sure to check their records, and when there is absolutely no record of any payments made to contributors, but Fotolia is reporting that contributors have been paid and issued 1099 Forms, somebody will have to answer for IRS reporting errors.
-
I wanted to get back to the root of this thread. Here in the U.S. if you earn money by working in Dec. of one year, but do not receive that money (either as a credit on your bank statement or as cash in hand) until the next year, that income (money) is reported for the year in which you receive the income, not in the year in which you earned it.
Thanks, Stockboy, for going back to the root of the thread, which I started, and for your accurate interpretation of the situation in the USA.
Just today, my husband and I filed our tax return. I did (incorrectly!) report income from FT of $12.50, per FT's "corrected" 1099 statement, but only because it's such a little amount that I didn't figure it was worth getting into a wrangle with the IRS about it. But yes, it does stick in my craw to be forced to say I earned something, no matter how small, in a year when I received nothing whatsoever from that company.
I am verrrry happy to have FT out of my life. ;D
And as promised earlier, I'll come back to this thread to report if I ever actually receive any $$ from FT.
-
Hey!!! Miracles do happen. My Paypal account just now reported an $11.00 payment from Fotolia.
So, they withheld a nice round $1.50. But that's okay. I got paid and I got out. What's not to like?
-
As a relatively new contributor to microstock in general I'm confused
I've been reading threads of people abandoning fotolia due to multiple reasons
the lovely people at fotolia have rejected every single image I sent and listed everything and the kitchen sink as the reason
But the poll results show that fotolia is a top tier earner so should be worth getting into
should I even be trying to get into fotolia?
-
As a relatively new contributor to microstock in general I'm confused
I've been reading threads of people abandoning fotolia due to multiple reasons
the lovely people at fotolia have rejected every single image I sent and listed everything and the kitchen sink as the reason
But the poll results show that fotolia is a top tier earner so should be worth getting into
should I even be trying to get into fotolia?
A chronology of my experience with Fotolia:
+ A pregnant model shot with me and signed a model release in exchange for free maternity photos.
+ A couple of years or so later, she changes her mind, asking me to remove her pictures from all of the stock sites. Refuses to reimburse me. I refuse to remove the pictures.
+ The model contacts the stock sites. All of them except Fotolia refer her to me, since I uploaded a signed and witnessed model release. Fotolia blocks my entire account. (Bear in mind that once photos are uploaded to Fotolia and submitted, they cannot be edited, nor can they be deleted, by the contributor.)
+ I ask if they can remove the pictures of the model in question and unblock my account. They say no.
+ I then ask to close my account and deposit the amount due into my paypal account.
+ I get a system email from them saying that I have a message waiting for me, and directing me to log on to my account in order to read the message.
+ I try to log on to my account, but the system no longer recognizes an account with that user name and password. Apparently, they've closed my account, which means I'm unable to read their message.
So if you wish to do business with that kind of mentality, be my guest. And good luck. :P
-
+ The model contacts the stock sites. All of them except Fotolia refer her to me, since I uploaded a signed and witnessed model release. Fotolia blocks my entire account. (Bear in mind that once photos are uploaded to Fotolia and submitted, they cannot be edited, nor can they be deleted, by the contributor.)
Carl - You are right about the images being non-editable. But, I was able to delete images in the past. Is this a new change in FT ?
-
I'm not sure. It's been quite a while since I was on the site, but I recall seeing no mechanism for editing or deleting photos. The larger issue, though is that a model requested that images of her be removed, regardless of the fact that I uploaded a valid, signed and witnessed released, which they even acknowledged. Nevertheless, instead of removing those specific images, they chose to block my entire account. Had they been a high earner for me, I would have been severely impacted by their lunacy. Not worth the risk, if you ask me.
-
Shocking behaviour indeed by FT but I have always been able to delete images at FT by clicking on 'My Files' and then on the right hand side of each file there's 'View Information-Edit Data-Delete'.
You can't edit much but you can delete the file.