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I know the policy. For those that don't it is now this:
Quote:
We're writing to let you know that starting with transactions occurring on or after January 1, 2011, new Internal Revenue Service (IRS) regulations require Half.com (and other businesses that process payments) to file a Form 1099-K for all sellers with more than 200 transactions and $20,000 USD in sales per year.
Obvioulsy I need to see a lawyer and get advice but I figured I would ask here. I have started selling with a friend. The username is there ebay account, which goes to their paypal account and is linked to their bank account. Obviously they would be the one tht would be getting this form. Well I receive some of the money. What is the best way to show this on taxes, as when tax time rolls around next year, the 1099-k will show the total amount being given to them when they turn around and give me some of it.
It seems to me that we should set it up so that I am receiving a "paycheck" from them and then their would be a trail leaving them to me for tax purposes. Obviously this wouldn't matter to ebay, but it is needed to show the IRS at tax time. What is the best way to do this?
I have been selling model trains on eBay for a friend and neighbor who is is older and is giving up his hobby. My agreement with him is that he gets 50% of the gross sales and I get the remaining 50% but out of that I pay all fees and shipping expenses. My estimate is that my "net" profit will be about 25-30%
He had a TON of trains from over 35 years and has good records of what he paid for his hobby. Sadly, considering what he originally paid, he will have a net loss, but he is ready to move on.
So I am really acting as his agent or "selling assistant" but all of the sales receipts were sent to MY PayPal account and I paid him from that account.
Well, we did good in 2011 and had over 200 sales and over 20K in GROSS receipts so I got the 1099K from paypal.
It looks to me like the only place to report this income from 1099K is on Schedule C for a business. BUT I AM NOT A BUSINESS! When his trains are gone in the next month or two I'm DONE! (Filing a Schedule C might open me up to Self Employment Tax, licenses and other headaches that I don't need.)
I'm CONSIDERING just listing the money that I actually made on Line 21 of the IRS 1040 "other income" as a "commission not subject to SE" tax and attaching my own explanation and "schedule" that starts with the amount on the 1099K reduced by what I paid the man who actually owns the trains and all my costs of doing this work for him (like shipping costs, eBay fees, PayPal fees, printer ink, internet costs etc. All the items I COULD list on a business form Schedule C.)
Does anyone out there think this would satisfy the IRS?
I DON'T want to have to file as a "business" as when this is done the "business" is also done.
Please forgive me here but I am new to forums so I'm going to list some "keywords" in the hope that we get a little more exposure here. IRS, eBay, PayPal, eBay and 109K, PayPal and 1099k, agent, selling assistant, business, not a business, part time, 1099K, taxes, tax.
I will pay the taxes on what I have earned. Just trying to find the best way to do it without calling myself a "business".
Any help will SURELY be appreciated! I lost sleep over this ever since I received my 1099K
They issue you a 1099 for the amount they received on your behalf. They deduct it, you include it. That should be it.
If you received a 1099K (trains), I'd contact the sender and have them reissue under the TIN of your friend. It sounds like most of the transactions are his.
They issue you a 1099 for the amount they received on your behalf. They deduct it, you include it. That should be it.
If you received a 1099K (trains), I'd contact the sender and have them reissue under the TIN of your friend. It sounds like most of the transactions are his.
I think they would do it to the account holder. The income should probably not be picked up on the other income line either.
I am not sure why the guy would consult a lawyer and not a tax accountant.
The lawyer is going to charge him x3 the amount an accountant would and then refer him to an accountant because it is a mechanical tax compliance question.
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1099K Woes
