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Topic: March Stimulus Bill packs a Punch! Paypal etc to send 1099  (Read 1138 times)

calendria

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March Stimulus Bill packs a Punch! Paypal etc to send 1099
« on: March 12, 2021, 03:14:44 pm »
 :cat:

 :glasses-nerdy:

This new reporting begins Jan 2022


Stimulus Bill Requires Payment Processors (like Paypal) To Report Earnings of $600+ on 1099-K Tax Form

March 11, 2021, 22:47279 Commentsby Chuck
https://www.doctorofcredit.com/stimulus-bill-requires-payment-processors-like-paypal-to-report-earnings-of-600-on-1099-k-tax-form/
 
Update: it seems that section 9674 was struck from the final bill, so this law was not passed, as I understand. Phew! Hat tip to reader Neo Seems the final version of the bill DOES have section 9674, so we are on the hook for this after all. Bummer!

Original Post:

A major under-reported facet of the massive $1.9 stimulus bill (round 3) is that it strengthens requirements on payment processors like Paypal to report on income received through their platforms:

Beginning on January 1, 2022, third party payment processors will have to report any income for goods or services exceeding $600 during the calendar year on a form 1099-K. Previously, processors only had to report this income if it was BOTH: (a) $20,000 or more during the calendar year, and (b) 200 transactions or more. This allowed most smaller stuff (like Topcashback, Ebates, PFS, Swagbucks payments) to go unreported.

More:
This change concerns me for two reasons:

I’m worried that companies may not always know what is ‘goods and services’ and what is not, leading to misclassifications. E.g. portal earnings are likely rebates and not considered ‘goods or services’, but I’m not confident that Paypal will classify that correctly (as has been the case in the past when even P2P payments were somehow included in the 1099).
Even if everything is correct and it’s income that I’m reporting anyway, it still adds a level of complication to everything, e.g. making sure the tax form is directed to the correct entity (personal or business), and having to burden your accountant with multiple small tax forms from a bunch of random companies.
Whether or not you get a tax form does not change what you actually owe, e.g. if you don’t get a tax form you still have to report income earned, and if you do get a tax form you still only pay tax on the actual profits. (The 1099-K is just for total processed transactions, it’s not assumed to be your total profit; typically the profit on a sale is only a tiny percentage of the 1099-K reporting amount.) But it could still create a hassle with all this. The primary purpose of this stricter law seems to be for gig workers like Uber/Lyft drivers and the like, but it seems like the rest of us will get snared by this as well.

Interestingly, if you earn $500 from Topcashback and $500 from Ebates, and have them both paid via Paypal, then you might  get a 1099-K from Paypal, but if you get paid from Topcashback and Ebates directly to your bank, then you should not get a tax form.

You can read the full stimulus bill at this link; section 9674 is what we are discussing in this post:

SEC. 9674. MOD Of Exceptions For Reporting Of Third Party Network Transactions.
(a) In General.—Section 6050W(e) of the Internal Revenue Code of 1986 is amended to read as follows:

“(e) De Minimis Exception For Third Party Settlement Organizations.—A third party settlement organization shall not be required to report any information under subsection (a) with respect to third party network transactions of any participating payee if the amount which would otherwise be reported under subsection (a)(2) with respect to such transactions does not exceed $600.”.

(b) Clarification That Reporting Is Not Required On Transactions Which Are Not For Goods Or Services.—Section 6050W(c)(3) of such Code is amended by inserting “described in subsection (d)(3)(A)(iii)” after “any transaction”.

(c) Effective Date.—

(1) In General.—The amendment made by subsection (a) shall apply to returns for calendar years beginning after December 31, 2021.

(2) Clarification.—The amendment made by subsection (b) shall apply to transactions after the date of the enactment of this Act.


« Last Edit: March 12, 2021, 03:18:08 pm by calendria »

calendria

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #1 on: March 14, 2021, 12:42:36 pm »
 >:(

 :cat:

Comments anyone?

maxprohits

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #2 on: March 15, 2021, 07:14:13 am »
Who cares.

countrygirl12

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #3 on: March 15, 2021, 10:18:26 am »
:cat:

 :glasses-nerdy:

This new reporting begins Jan 2022


Stimulus Bill Requires Payment Processors (like Paypal) To Report Earnings of $600+ on 1099-K Tax Form

March 11, 2021, 22:47279 Commentsby Chuck
https://www.doctorofcredit.com/stimulus-bill-requires-payment-processors-like-paypal-to-report-earnings-of-600-on-1099-k-tax-form/
 
Update: it seems that section 9674 was struck from the final bill, so this law was not passed, as I understand. Phew! Hat tip to reader Neo Seems the final version of the bill DOES have section 9674, so we are on the hook for this after all. Bummer!

Original Post:

A major under-reported facet of the massive $1.9 stimulus bill (round 3) is that it strengthens requirements on payment processors like Paypal to report on income received through their platforms:

Beginning on January 1, 2022, third party payment processors will have to report any income for goods or services exceeding $600 during the calendar year on a form 1099-K. Previously, processors only had to report this income if it was BOTH: (a) $20,000 or more during the calendar year, and (b) 200 transactions or more. This allowed most smaller stuff (like Topcashback, Ebates, PFS, Swagbucks payments) to go unreported.

More:
This change concerns me for two reasons:

I’m worried that companies may not always know what is ‘goods and services’ and what is not, leading to misclassifications. E.g. portal earnings are likely rebates and not considered ‘goods or services’, but I’m not confident that Paypal will classify that correctly (as has been the case in the past when even P2P payments were somehow included in the 1099).
Even if everything is correct and it’s income that I’m reporting anyway, it still adds a level of complication to everything, e.g. making sure the tax form is directed to the correct entity (personal or business), and having to burden your accountant with multiple small tax forms from a bunch of random companies.
Whether or not you get a tax form does not change what you actually owe, e.g. if you don’t get a tax form you still have to report income earned, and if you do get a tax form you still only pay tax on the actual profits. (The 1099-K is just for total processed transactions, it’s not assumed to be your total profit; typically the profit on a sale is only a tiny percentage of the 1099-K reporting amount.) But it could still create a hassle with all this. The primary purpose of this stricter law seems to be for gig workers like Uber/Lyft drivers and the like, but it seems like the rest of us will get snared by this as well.

Interestingly, if you earn $500 from Topcashback and $500 from Ebates, and have them both paid via Paypal, then you might  get a 1099-K from Paypal, but if you get paid from Topcashback and Ebates directly to your bank, then you should not get a tax form.

You can read the full stimulus bill at this link; section 9674 is what we are discussing in this post:

SEC. 9674. MOD Of Exceptions For Reporting Of Third Party Network Transactions.
(a) In General.—Section 6050W(e) of the Internal Revenue Code of 1986 is amended to read as follows:

“(e) De Minimis Exception For Third Party Settlement Organizations.—A third party settlement organization shall not be required to report any information under subsection (a) with respect to third party network transactions of any participating payee if the amount which would otherwise be reported under subsection (a)(2) with respect to such transactions does not exceed $600.”.

(b) Clarification That Reporting Is Not Required On Transactions Which Are Not For Goods Or Services.—Section 6050W(c)(3) of such Code is amended by inserting “described in subsection (d)(3)(A)(iii)” after “any transaction”.

(c) Effective Date.—

(1) In General.—The amendment made by subsection (a) shall apply to returns for calendar years beginning after December 31, 2021.

(2) Clarification.—The amendment made by subsection (b) shall apply to transactions after the date of the enactment of this Act.




PayPal does not send you a 1099. I have had earnings of over $10,000 and they did not send me a 1099.  That comes from the payer. And the stimulus checks are not taxable. Besides that who in the world would have their stimulus checks sent to PayPal?

The crap you have in bold print is for SELLERS not just random users like us who get payments in to PayPal. I am sure companies know what "goods and services" are.  I was doing another survey site and all of a sudden I started being charged a fee when I was paid. I contacted PP as well as the company I done the surveys for.  The company told me they got in trouble because they were making so many payments of the same amount every month and that to be legal they had to change it to "goods and services" because you are being paid for a service ie the survey.  Don't be surprised if in the near future all money paid for PTC sites and surveys ends up being taxed.  Some "survey sites" you have to provide a SS number to begin working on the site and are sent a 1099 no matter how little the earnings.

maxprohits

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #4 on: March 17, 2021, 06:39:09 am »
Who cares I can't even get paid from Fusion Cash from 2 months ago.  I am going to have to worry about a 1099?  HaHaHa lol!

berthabutt

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #5 on: March 22, 2021, 07:52:06 pm »
This is really confusing.   ???

berthabutt

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #6 on: March 22, 2021, 07:57:28 pm »
So if you made over $600 at a certain site like Fc and had it sent to PayPal, you have to fill out a 1099 for both PayPal and Fc for the same earnings?

potluck6

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #7 on: March 22, 2021, 11:39:10 pm »
I would love to make 600.00 on fusioncash.  The stimulas checks are not taxable.

calendria

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #8 on: March 23, 2021, 12:53:52 pm »
 :cat:

https://www.doctorofcredit.com/stimulus-bill-requires-payment-processors-like-paypal-to-report-earnings-of-600-on-1099-k-tax-form/

The link has this on the page so my guess is anything over 600.00 like the survey sites do, now Paypal has to do.

This any deposit to Paypal over 600.00 not just sellers !!

This allowed most smaller stuff (like Topcashback, Ebates, PFS, Swagbucks payments) to go unreported.
This change concerns me for two reasons:

I’m worried that companies may not always know what is ‘goods and services’ and what is not, leading to misclassifications. E.g. portal earnings are likely rebates and not considered ‘goods or services’, but I’m not confident that Paypal will classify that correctly (as has been the case in the past when even P2P payments were somehow included in the 1099).
Even if everything is correct and it’s income that I’m reporting anyway, it still adds a level of complication to everything, e.g. making sure the tax form is directed to the correct entity (personal or business), and having to burden your accountant with multiple small tax forms from a bunch of random companies.
Whether or not you get a tax form does not change what you actually owe, e.g. if you don’t get a tax form you still have to report income earned, and if you do get a tax form you still only pay tax on the actual profits. The primary purpose of this stricter law seems to be for gig workers like Uber/Lyft drivers and the like, but it seems like the rest of us will get snared by this as well.

sfreeman8

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #9 on: March 31, 2021, 09:05:14 am »
You always had to report any earnings from any site of $600 or more and it was the responsibility of the payer to send you a 1099.  So, if you made $600 from FC and you had it sent to PayPal, you should have gotten a 1099 from FC, not Paypal. Same with any other site.   

calendria

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #10 on: March 31, 2021, 02:34:48 pm »
You always had to report any earnings from any site of $600 or more and it was the responsibility of the payer to send you a 1099.  So, if you made $600 from FC and you had it sent to PayPal, you should have gotten a 1099 from FC, not Paypal. Same with any other site.   

Now Paypal has to sent these too!  Not just to sellers either.

dsawan

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Re: March Stimulus Bill packs a Punch! Paypal etc to send 1099
« Reply #11 on: April 08, 2021, 12:24:01 am »
never made that much

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