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 Tax dilemma: Did not report income from company I did not get a W2 from and now the IRS knows.
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ConneB
Apprentice

1 Posts

Posted - 05/25/2003 :  06:10:38 AM  Reply  Reply with Quote
I am hoping somebody will be able to help me with my problem!
I have been mystery shopping for a little over 2 years now. One of the companies I was working for lost their contract with one of the stores I had been shopping and therefore didn't have any more work for me. I had worked for them from January to May and made $550.
When it came time to do our taxes I completely forgot about this company(they didn't send me a W2 since it was under $600) and didn't file the $550. I filed all the other monies earned wether or not I had a W2.

About a month after I filed my taxes I get a call from said company asking me to confirm my info since the IRS called them wanting them to confirm my info for them(IRS). All they wanted was name, address, ssn.....

I have been trying ever since to find a way to fix the situation with no luck. The extra $550 makes no difference in the outcome of our taxes but I would still like to report it, I don't want to get in trouble with the IRS thats for sure!

I would greatly appreciate any advice anyone can give me! I have been losing way too much sleep over this!

EmilyPWa
Valued Contributor

Willard, UT
USA
168 Posts

Posted - 05/25/2003 :  07:07:19 AM  Send EmilyPWa an AOL message  Reply  Reply with Quote
I know that you can file a ammended tax return up to one year later. i would check wiht a accountant or the IRS to make sure, My dad is a CPA and I forgot to report something last year. This is what he told me to do! HTH

Emily
Now shopping in the Ogden UT area
MSPA Gold Certified
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DonnaOR
Member

Sherwood, OR
USA
15 Posts

Posted - 05/25/2003 :  09:04:11 AM  Reply  Reply with Quote
I am CPA who also performs mystery shops on the side.

You are correct (and we all know) that if you earn less than $600, you are not required to report it to the IRS. Even if the MS company reports it to them, you still are not required to report it. You CAN, but you don't have to. The IRS made the tax law and they are pretty good at adhering to it.

If you are still losing sleep over this, EmilyPWa's advise was correct in that you can file an amended return up to one year after the given tax year. YOu can do this by going to www.irs.gov and typing 1040X in the "Search Forms and Publications for" search box. It returned 119 hits for me, but what you need is very close to the top. Download the Form 1040X and a little further down is Instruction 1040X.

Just a side note - the forms we typically receive from MS companies are called 1099s, which report miscellaneous income that has not been taxed. You'll get W-2s when there is an employer/employee relationship. (There are other factors, but those are the basics).

Hope this helps!
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DarleneFL
Star Contributor

Tampa Bay Area, FL
USA
343 Posts

Posted - 05/25/2003 :  09:04:56 AM  Reply  Reply with Quote
I seem to recall that you can file an amended return up to 3 years later, but don't quote me on that. I suggest that you visit the IRS website where you will find a wealth of information and all the forms you need for whatever you are filing.

http://www.irs.gov

I am not an accountant or tax professional, but I don't think the IRS will really care at this point as long as the amended income amount does not affect the total tax due. Of course, this is assuming that you claimed all other income on your return. I simply mean that I don't think you would be penalized if the income discrepancy does not affect the total tax due.

Darlene
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Peter T. Sanderson
Valued Contributor

Pawley's Island, SC
USA
150 Posts

Posted - 05/25/2003 :  09:21:56 AM  Reply  Reply with Quote
DonnaOR you have it backwards.

The companies do not have to report income paid to people under $600 (but some do anyway.) You have to report every dollar you earn regardless of how much is from any one company.

Think about what you are saying. What if someone worked for 30 companies and made $500ish from each. Are you saying they could just not report $15K in income? Of course that makes no sense.

It is the companies that do not have to report under $600.

This case is a prime example why you should not cheat. (not that the poster cheated, she claims it was an honest mistake) Some companies report everything or are forced to.

Example:
A small company claims they took in $250K and paid out $150K in fees. IRS says what's with the $150K in fees. They say "It was to 2000 shoppers who each made under $600 so no 1099s filed." IRS says, prove it. They want Name, address, SS# of these 2000 people.

So, just because it is under $600, it still may get reported and no matter what not reporting it is cheating.
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MarteeC
Star Contributor

Tampa, FL
USA
1352 Posts

Posted - 05/25/2003 :  10:50:31 AM  Reply  Reply with Quote
You absolutely ARE required to report ALL income over $600.00 COMBINED to the IRS. This means that if you earn $550.00 from one company and $51.00 from another, while they are not legally required to provide a 1099 to you, you are still required to report this income. The companies are not required to provide a 1099 to an individual who has earned less than $600.00, but they DO report the income to the IRS as an expense for doing business and as Peter stated if the IRS comes back to that company for proof of expenses, they will then provide that info if they have not done so already. Some companies automatically provide that info to the IRS but not to you as they are not legally required to. This is why it is so important for YOU to keep track of your earnings and not rely on a company to do so for you and to report ALL earnings. I have received 1099s for as little as $12.00.
File an amended return.
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Cchrissyy
Valued Contributor

CA
USA
170 Posts

Posted - 05/25/2003 :  11:20:00 AM  Reply  Reply with Quote
you need to file an ammended return.

and from now on, keep records! Don' t assume the companies will contact you. it is your repsonsibility to report every dollar you earn.

Chrissy
Northern CA full-time shopper
Proudly MSPA gold certified!
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Arlene_HI
Star Contributor

Lawai, HI
USA
676 Posts

Posted - 05/25/2003 :  11:36:55 AM  Reply  Reply with Quote
First, Peter is correct. You must report ALL income. It is the company that is not required to send 1099's for less than $600. Whether they do or do not, you are required to report all income.

Second, get professional advice. Free advice is worth what you pay for it. You can see that you have gotten conflicting advice as there is much confusion on this topic. Seek a professional.

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Shasha
Valued Contributor

MS Gulf Coast
USA
241 Posts

Posted - 05/25/2003 :  11:45:18 AM  Reply  Reply with Quote
Based on my research of MS shopping income, you are required to report all earnings regardless of how little it was. I personally keep track of all earnings and expenses with an EXCEL spreadsheet. When it is time to do my taxes, I have all my information regardless of what the MS companies provided me. This protects me in case the IRS ever decides to audit my tax records. Just a thought....

Also, you can amend a tax return up to three years later. Amendment is actually an easy process.

mystery shopping along the mississippi gulf coast & mobile, al
mspa silver certified
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Leigh
Member

USA
32 Posts

Posted - 05/25/2003 :  12:46:53 PM  Send Leigh an AOL message  Reply  Reply with Quote
I filed taxes for the first time since I have been shopping and I provided my accountant with an excel spreadsheet broken down into month by month earnings and reimburseemnts. I did not specify how much from each company. As long as I have kept accurate records, I hope there is no problem. So, in other words, are you saying the IRS just wants to know bottom line, and not a breakdown, company by company?
ps: this doesn't mean this is the first time I have ever filed taxes!Just the first time since I began mystery shopping! I don't want an audit because of a typo!
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SharonKrist
Apprentice

Saint Charles, MO
USA
3 Posts

Posted - 05/25/2003 :  1:38:39 PM  Reply  Reply with Quote
Leigh ~

On Schedule C, Profit or Loss from Business, the IRS only wants the total amount of gross income (the bottom line). You do not have to report the income from each company separately. As Martee and Peter have explained, you have to report ALL income over $600 total, not just $600 from each company.

I spoke to an auditor at the IRS and he said the Excel spreadsheet that I use to track my shops (name of shopping company, date shopped, date I received payment, the business shopped, mileage incurred, reimbursement or fee received and other miscellaneous expense) would be exactly what they would need in case of an audit. I always print out a copy of my spreadsheet and include it in my file with my tax information. Hopefully, I'll never have to use it!
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Roger42
Star Contributor

USA
277 Posts

Posted - 05/25/2003 :  3:04:12 PM  Reply  Reply with Quote
There is something wrong with the statement that "the IRS called" I've never know a government agency - let alone the IRS - to "call" for information. How does the person on the other end know they are speaking with the IRS?

And why would any company supply information on an IC or employee over the phone that would include the SS #?

It's fishy if you ask me.

Roger
Gold Certified - 15 Years Experience
Specializing In Audits
Covering Mid Atlantic and Northeast
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Cindy in Indiana
Star Contributor

South Bend, IN
USA
277 Posts

Posted - 05/25/2003 :  7:19:09 PM  Send Cindy in Indiana an AOL message  Reply  Reply with Quote
I agree with Roger. I would have requested something in writing before I gave my information.

Cindy
MSPA Gold Certified #hp4ksf


Happily shopping Northern Indiana and Southwestern Michigan since 2000.
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DonCoffin
Contributor

USA
95 Posts

Posted - 05/26/2003 :  07:03:46 AM  Reply  Reply with Quote
This isn’t in response to the original post but to follow up posts. I just amazes me how many times over the last 2+ years I have seen posts where it is stated it is not necessary to report ALL income. As concerned as the IRS is supposed to be about the underground economy, wouldn’t you think they would have companies report all monies, not just that over $600?

It also bothers me, especially on this holiday, that shoppers are choosing to cheat and not report income. I was unmercifully attacked by 2 different posters on this forum for chiding one who had said it was not worth doing a $9 shop for the new company because you are an employee and therefore they take out withholding!!! What they were in effect saying was “I am not paying my taxes and a $9 shop is not worth it if I have to pay them!” To say it in print was bad enough but then another posted to defended the person.

Oh well, I will get off my soap box now.
I hope you are having a great holiday.

Don
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CarolynGA
Member

Duluth, GA
USA
17 Posts

Posted - 05/27/2003 :  05:50:25 AM  Reply  Reply with Quote
Just file an amended return. Odds are the amount won't increase your tax liability, and if it does, it will probably only be a couple of dollars. Don't worry about it--that's why there are tax return amendments. This type of thing happens all the time, with paper lost in the mail, etc.

Shopping Metro Atlanta for you--no job too big or too small!
I am MSPA Silver certified!
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MisterBill
Star Contributor

NY
USA
256 Posts

Posted - 05/27/2003 :  10:45:37 PM  Reply  Reply with Quote
quote:
Originally posted by CarolynGA

Just file an amended return. Odds are the amount won't increase your tax liability, and if it does, it will probably only be a couple of dollars.


Huh? Unless she had basically no other income for the year, reporting an extra $550 is definitely going to increase the tax liability, in all likelihood by $100 or more. Nevertheless, she has to file an amended return to report it, unless it was her only income for the year, in which case her total income was under $600 (but how likely is that).

Also remember to file an amended state return, since I believe the IRS will notify them that you've filed an amended federal return.

Bill
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Peter T. Sanderson
Valued Contributor

Pawley's Island, SC
USA
150 Posts

Posted - 07/30/2003 :  10:38:21 AM  Reply  Reply with Quote
quote:
Originally posted by MarteeC
You absolutely ARE required to report ALL income over $600.00 COMBINED to the IRS.
quote:
Originally posted by BillRubin
unless it was her only income for the year, in which case her total income was under $600 (but how likely is that).
I have never seen a rule where you do not have to file taxes on total income under $600. I think this is just people reading the 1099 rule backwards. Yes, there as a number under which you do not have to file at all, but it is not $600. It is the company that is not required to send 1099's for less than $600.

From IRS form instructions, you do not have to file at all if your gross income is under $7700 Single or $13,850 Married. However if you would get a refund on withheld taxes, then you have to file.
(Gross income = all income received in the form of money, good, property and services that is not exempt from taxes.)

If you are filing, you report everything you earned.
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MissyShopper
Member

Check, VA
USA
25 Posts

Posted - 10/08/2004 :  1:45:51 PM  Send MissyShopper an AOL message  Reply  Reply with Quote
This whole discussion has totally confused me. So in essense, no matter what you earn MSing, you have to file it on taxes??? Is that correct? I only started doing this in August and have made around $100.00 to $150.00, not all collected yet. How do I prove I have made this money and do I file the money not yet collected? Thanks for all the wonderful info you all put here.

Melissa Akers
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CariTX
Valued Contributor

Plano, TX
USA
201 Posts

Posted - 10/08/2004 :  10:11:13 PM  Reply  Reply with Quote
MissyShopper, you are supposed to report all income, regardless of the source and regardless of the amount, to the IRS (I'm taking the H&R Block Income Tax preparation course and we just recently went over this). You can either report it on a Schedule C if you are operating a business or under Other Income if you are not. If you earn more than $600 from any one company, they are supposed to send you a 1099 form showing how much they paid you.

As far as proof of income, I keep a spreadsheet as others do with the information about each assignment, plus I keep a copy of my report and attach the check stub to it when the payment comes in.

Hope this helps!

MSPA GOLD Certified gdhls4. Happily shopping and merchandising in North Texas
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MissyShopper
Member

Check, VA
USA
25 Posts

Posted - 10/09/2004 :  05:51:08 AM  Send MissyShopper an AOL message  Reply  Reply with Quote
Thx CariTX. One more question, do I file only money I have been paid or do I file by jobs that I have performed even though I have not been paid for some of them?

Melissa Akers
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CariTX
Valued Contributor

Plano, TX
USA
201 Posts

Posted - 10/09/2004 :  1:53:49 PM  Reply  Reply with Quote
You only report money that you actually received during the year. You can report and deduct certain expenses for your shops even though you haven't gotten paid for them yet.

The rule of thumb, according to my H&R Block training, is that you report income in the year you receive it and you report expenses when they are paid. If you put something on a credit card, the date you charged it is considered the date of payment.

I am not a tax professional yet, but I am taking the H&R Block tax preparation course.


MSPA GOLD Certified gdhls4. Happily shopping and merchandising in North Texas
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