since Paypal does not sort fees from reimbursements, how will the IRS deal with this? Don't tell me they will in an audit. They can't audit millions of people getting a 1099K You want to bet they will tax you on the higher of the two. They just might make reimbursements taxable.

Edited 1 time(s). Last edit at 01/31/2025 10:34PM by johnb974.

It's really more for you to sort out the differences in payments and reimbursements than the IRS. You should deduct your expenses and reimbursable amounts on the schedule c.

[www.irs.gov]

@joanna81 wrote:

It's really more for you to sort out the differences in payments and reimbursements than the IRS. You should deduct your expenses and reimbursable amounts on the schedule c.

[www.irs.gov]

How is the IRS going to know, without an audits?
Will the differences between a 1099 k and 1099 NEC confuse the people at the IRS?

Edited 1 time(s). Last edit at 02/01/2025 12:53AM by johnb974.

That's where they're going to expect that people show their NEC income on their tax return. The 1099 K shows the amounts that went into paypal, not the source. So it could be online sales, etc. The 1099 NEC shows the source of the money, and that you did work as a non-employee, aka contractor.

Here's the problem that I have ran into with 1099NEC & 1099K.
I have 2 MSC's that pay me thru PayPal, for which I received a 1099K for the total amount of payments, which included shop fees and reimbursements.
Both MSC's send me 1099NEC.
Here's the problem, 1 MSC sends a 1099NEC with my fees and reimbursements included in box 1 of income received.
The other MSC only sends a 1099NEC with shop fees reported in box 1 of income received.
So my 1099K does not match the amounts of the 2 different 1099NEC that I have received.
I know the amounts of my fees and reimbursements from each company, but I don't know how to report it on schedule C with the situation I have described.
Any ideas?

Report the full amount on the document and claim your reimbursements as expenses in your Schedule C.

@jpgilham wrote:

Report the full amount on the document and claim your reimbursements as expenses in your Schedule C.

There will still be a discrepancy, because one MSC only included fees on their 1099NEC, but the 1099K shows the reimbursements and fees from that MSC

Edited 1 time(s). Last edit at 02/17/2025 03:17PM by Sonicshopper.

ALL the money you receive should be reported as income. Whatever your expenses are, you deduct as expenses. A minus B equals what you will be taxed on. What the IRS wants to see is that all your income is reported. Likely you won't get a 1099 from everyone you worked for. REPORT THE INCOME ANYWAY. Some people believe that if they don't get a 1099 they don't have to report the income. Yes, you do. (I spent over 20 years as a tax preparer until I retired a couple years ago.) Report the income, report the expenses, report your mileage. Don't worry about the 1099 forms. As long as your reported income is at least what the IRS knows about from their copies of the 1099's that's all that matters.

Some people could end up with 100 1099's. No, they do NOT have to itemize each 1099 on their tax return. The just need to make sure they don't report LESS than that total. (THAT will trigger an audit!) When you are using some online tax preparation software, it wants you to enter every document, but that's just so it can do the math for you. You don't have to enter every document. You just have to report the income from that category. W-2's are different. Enter all of them. But 1099's are just to keep you honest.

(If you have investments, you will need to provide those documents because those kind of 1099 forms aren't the same as 1099-MISC or NEC's.)

Edited 1 time(s). Last edit at 02/17/2025 07:56PM by azsrshopper.

@azsrshopper wrote:

ALL the money you receive should be reported as income. Whatever your expenses are, you deduct as expenses. A minus B equals what you will be taxed on. What the IRS wants to see is that all your income is reported. Likely you won't get a 1099 from everyone you worked for. REPORT THE INCOME ANYWAY. Some people believe that if they don't get a 1099 they don't have to report the income. Yes, you do. (I spent over 20 years as a tax preparer until I retired a couple years ago.) Report the income, report the expenses, report your mileage. Don't worry about the 1099 forms. As long as your reported income is at least what the IRS knows about from their copies of the 1099's that's all that matters.

Some people could end up with 100 1099's. No, they do NOT have to itemize each 1099 on their tax return. The just need to make sure they don't report LESS than that total. (THAT will trigger an audit!) When you are using some online tax preparation software, it wants you to enter every document, but that's just so it can do the math for you. You don't have to enter every document. You just have to report the income from that category. W-2's are different. Enter all of them. But 1099's are just to keep you honest.

I received 2 1099 NEC's. 1 of the 1099NEC 's shows fees only. The other 1099NEC shows fees and reimbursements.
Both MSC's pay through PayPal, which caused me to receive a 1099 K for fees AND reimbursements from both MSC's.
Any ideas on how I keep from paying taxes on a 1099K , which was only for payments from mystery shopping that I received 1099NEC's from?

Edited 1 time(s). Last edit at 02/17/2025 08:03PM by Sonicshopper.

I use an accountant, but it will be more work for us. You have to keep track of the reimbursements. I left PayPal for companies that offered other options.

I can't figure out how to start a new chat to ask this question. Hoping someone will see this and can answer. I received a presto 1099. I also received a 1099 from Ipsos. Some of the presto shops are also ispos shops. Are they reported on both? This is so complicated. I have a CPA, but even she is at a loss with all of this!

Good point about Presto, last year was the first time I used it. I haven't gone through any of my docs yet. But on the Sassie platform though, there's a shop record but zero payment. I'm guessing it's not reported on the MSC's 1099, but on the 1099 from LiveShopper LLC.

@alucegoose wrote:

I can't figure out how to start a new chat to ask this question. Hoping someone will see this and can answer. I received a presto 1099. I also received a 1099 from Ipsos. Some of the presto shops are also ispos shops. Are they reported on both? This is so complicated. I have a CPA, but even she is at a loss with all of this!

Exactly!
Yes, both 1099 NEC's (PRESTO & IPSOS) are reported on the PayPal 1099K, because both MSC's pay through PayPal.
Here's the problem:
PRESTO's 1099 NEC lists shops AND reimbursements.
IPSOS 1099NEC lists only shop fees
On PayPal's 1099K it lists shop fees and reimbursements from both IPSOS and PRESTO.

Thanks! I did not want to comb through this yet!

This post doesn't answer the issue of the "double" 1099s, but I hope someone finds it worthwhile.

I have always treated all monies paid to me as income, and I have always treated all monies that I have paid out as expenses. That way there are only 2 categories. Instead of money paid to me being sometimes fees and other times reimbursements, it's just all money paid to me and it goes on my tax return as gross income received. Instead of money that I paid out being sometimes reimbursed back to me and sometimes not, it's all just money that I paid out and i goes on my tax return as expenses. 2 categories...money received, money paid out.
My Schedule C ends up with my net income being correct, and I don't have to worry about what purchases were reimbursed and what purchases weren't reimbursed. I've been doing it this way for almost 30 years, and never heard a peep out of the IRS.

I saw something online this morning and also have seen something similar posted here in another thread. I think that I will do this year on my Schedule C what I will describe later in this post. I believe that instead of trusting the IRS to "figure it out" that we should be proactive on our Schedule Cs and figure it out for the IRS.

What I saw online was a scenario where on a particular month your roomie Venmos you $700 for their half of the rent, and that $700 mistakenly shows up on a 1099K. The strategy presented is that the person should enter $700 on the "other income" line of their tax return with a notation "amount mistakenly reported on 1099K." Then, in the adjustments section on the "other adjustments" line on the return the person should enter $700 with a notation "amount mistakenly reported on 1099K." That way the IRS is alerted to the item, and the numbers are reconciled by the taxpayer on their return instead of hoping that the iRS will "figure it out."

I'm going do something very similar on my Schedule C this year. The entire amount of what I received on a 1099K from Paypal was also reported on a 1099NEC from Bestmark. I'm going include as gross income BOTH amounts on my Schedule C. Then on the Other Expenses line I will back out the excess amount with notation "duplicate income reported on both 1099K and 1099NEC." That way the IRS will know that there were duplicate amounts reported and will also know that I reconciled the amounts on my tax return.

What do you think about this idea? Thanks for reading.

@teacherguy wrote:

Instead of money that I paid out being sometimes reimbursed back to me and sometimes not, it's all just money that I paid out and i goes on my tax return as expenses.

The only thing I would say, as an example, is if the shop reimbursed a purchase up to $50, and there were many items available under $50, but you purchased a $80 item, I would think the expense would be $50. Ordinary and necessary.

@teacherguy wrote:

I'm going do something very similar on my Schedule C this year. The entire amount of what I received on a 1099K from Paypal was also reported on a 1099NEC from Bestmark. I'm going include as gross income BOTH amounts on my Schedule C. Then on the Other Expenses line I will back out the excess amount with notation "duplicate income reported on both 1099K and 1099NEC." That way the IRS will know that there were duplicate amounts reported and will also know that I reconciled the amounts on my tax return.

What do you think about this idea? Thanks for reading.

I think other forum members mentioned on planning doing something similar, as well. At the end of the day, I think it's presentation at how you arrived at final amounts, with the provided source docs. Going this route might clear up any potential confusion. If a return is being e-filed, the data entered for source docs will most likely be captured in the e-file.

Edited 1 time(s). Last edit at 02/21/2025 04:17PM by Okie.

With all the cuts Trump is making, will the IRS even have the staff to do audit?

I was waiting for someone to comment that. Also, has anyone on here ever had their Schedule C from Mystery Shopping audited?

@johnb974 wrote:

With all the cuts Trump is making, will the IRS even have the staff to do audit?

@gigishopper wrote:

I was waiting for someone to comment that. Also, has anyone on here ever had their Schedule C from Mystery Shopping audited?

@johnb974 wrote:

With all the cuts Trump is making, will the IRS even have the staff to do audit?

In the 10 years I've done mystery shopping I have never been audited. Mystery shopping has been my only working income. I'm on Social Security.

Teacherguy: In past years I have reported on Schedule C the 1099Ks and 1099-NECs I received as they were reported to the IRS and have then expensed out duplicate payments and reimbursements by explicitly listing them as duplicate amounts and reimbursements on Schedule C. I have not experienced problems with this approach.