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Author Topic: 1099 and Paypal  (Read 924 times)

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« on: January 25, 2025, 08:13 »
0
I received a 1099 from PayPal for my stock royalty payouts for 2024.  problem is, I also receive 1099 for those same royalties by the individual stock agencies.  has anyone else encountered this?


« Reply #1 on: January 25, 2025, 10:06 »
0
I am in the same boat for the first time this year as well. I don't know what to do about it. I think there are two options, but I don't know which is correct (assuming Schedule-C Sole-Prop for simplicity):

  • Report the income twice, from both the 1099-K and the 1099-MISC forms, and then make some kind of adjustment to reduce my income by the duplicated amount. But where do I make this adjustment, and what is the adjustment called?
  • Only report the income once from the 1099-K. But then the IRS will have received both forms, and it would look like I'm under-reporting my income.


I don't know how to do Option 1 properly and Option 2 seems like it may cause an audit. So I have no idea what to do.

wds

« Reply #2 on: January 25, 2025, 15:02 »
+1
How and when did you receive a 1099 from Paypal? I have not seen one yet (in US). Is it possible you have to reach a certain dollar amount payout before Paypal issues a 1099?

« Reply #3 on: January 26, 2025, 08:12 »
0
The IRS lowered the 1099K reporting threshold from $20K and 200 transactions to $5K and 200 transactions.  Next year it lowers again to $600.  Double reporting of income (1099 misc from agencies and 1099K from paypal) will be a problem for many this year. 

I'm not sure how to address it on my tax form.. I'm seeing conflicting information currently.

« Reply #4 on: January 26, 2025, 09:47 »
0
The IRS lowered the 1099K reporting threshold from $20K and 200 transactions to $5K and 200 transactions.  Next year it lowers again to $600.  Double reporting of income (1099 misc from agencies and 1099K from paypal) will be a problem for many this year. 

I'm not sure how to address it on my tax form.. I'm seeing conflicting information currently.

Bingo! I would be so easy just to input your 1099K from paypal and not several 1099C's from the companies. But the 1099K might have errors. Total mess.

« Reply #5 on: January 26, 2025, 10:31 »
+3
I ignore anything from PayPal.  Never had an issue.  I report my income as I always do - cash accounting.

« Reply #6 on: January 26, 2025, 11:06 »
+1
What I think I'm going to do, to minimize the audit risk, is to report the income from both the 1099-K (assuming no errors, which there are none in my case) and the 1099-MISC forms, and then list the duplicate income on line 48 (Other Expenses) on schedule C, which flows into line 27a in the expenses section. That way on line 48, I can explicitly list it as "duplicate reported income", since I have the ability to label each expense listed there.

If anybody sees a problem with me doing it this way, please tell me. This makes the most sense to me when it comes to minimizing audit risk, but I'm not an accountant. I'm just guessing here.

« Reply #7 on: January 26, 2025, 11:29 »
+2
FYI

Gig worker, freelancer, hobby seller and other self-employed You're considered a sole proprietor and should report Form 1099-K payment information on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship).Nov 20, 2024

« Reply #8 on: January 27, 2025, 16:18 »
+1
I checked the 1099-K from PP, and it matches the earnings from mass payments made by my microstock companies to the cent.  The only discrepancy comes from the 1099-MISC provided by Adobe, since they don't report payments but earnings.

Does anyone using TurboTax know where this 1099-K should be entered to avoid duplicates?

« Reply #9 on: January 27, 2025, 18:54 »
+1
I checked the 1099-K from PP, and it matches the earnings from mass payments made by my microstock companies to the cent.  The only discrepancy comes from the 1099-MISC provided by Adobe, since they don't report payments but earnings.

Does anyone using TurboTax know where this 1099-K should be entered to avoid duplicates?

FYI

https://www.irs.gov/businesses/what-to-do-with-form-1099-k

« Reply #10 on: January 28, 2025, 10:57 »
+2
I checked the 1099-K from PP, and it matches the earnings from mass payments made by my microstock companies to the cent.  The only discrepancy comes from the 1099-MISC provided by Adobe, since they don't report payments but earnings.

Does anyone using TurboTax know where this 1099-K should be entered to avoid duplicates?

FYI

https://www.irs.gov/businesses/what-to-do-with-form-1099-k

Thanks.
There is a box in the 1099K form that can be used if the amount in box 1a is too high. I input the total values reported through all 1099-MISC and NEC.
The total amount reported by 1099-K is then reduced accordingly. The only remaining difference is a few hundred dollars, resulting from Adobe's unusual reporting of earnings instead of payments.

All is well now.
« Last Edit: January 28, 2025, 11:02 by Zero Talent »

« Reply #11 on: January 28, 2025, 11:26 »
+2
I imputed my 1099-K in turbo tax (Home and business edition). Piece of cake. Some folks feel why bother to use the 1099-K form---One my buddies that is an IRS agent told me to make sure you include this form if you are over the threshold. I guess they hired additional folks to monitor this new requirement thus I didn't want to trigger an audit.

« Reply #12 on: January 29, 2025, 21:52 »
+1
The situation is further complicated because I usually let my Adobe earnings accumulate and request payment the when I need the money. Often its in another calendar year.  What a pain in the a$$

« Reply #13 on: January 29, 2025, 23:50 »
0
Aren't you suppose to declare the money in the year that you are paid out, not the year in which the sale was made?

Uncle Pete

  • Great Place by a Great Lake - My Home Port
« Reply #14 on: January 30, 2025, 11:50 »
+1
Aren't you suppose to declare the money in the year that you are paid out, not the year in which the sale was made?

It depends, but normally yes, income is when we get paid the money. Adobe uses accrual accounting method, where income is reported when earned rather than received.

I'm not an accountant, I don't do my own taxes, I pay someone who went to school for that and she takes classes every year to stay current with the rules and laws. However, for anyone here who wants to read what someone involved in business and financial law says:  https://legalclarity.org/i-received-a-1099-misc-but-never-got-paid-what-are-my-options/

Good luck, there are many possible options.


FYI

https://www.irs.gov/businesses/what-to-do-with-form-1099-k

There is a box in the 1099K form that can be used if the amount in box 1a is too high. I input the total values reported through all 1099-MISC and NEC.
The total amount reported by 1099-K is then reduced accordingly. The only remaining difference is a few hundred dollars, resulting from Adobe's unusual reporting of earnings instead of payments.

All is well now.

There you are, yet another good option.
« Last Edit: January 30, 2025, 11:53 by Uncle Pete »


 

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