Volition.com Forums

Username:
Password:
Save PasswordRegister
Forgot Password / Username?
Home | Search | Chat | FAQ | Posting Rules

 All Forums
 Mystery Shopping, Merchandising & Demo
 Independent Contractor Taxes
 MSCs reporting Reimbursements on 1099s
 Reply to Topic
 Printer Friendly

Author Previous Topic Topic Next Topic  

MariaPec
Valued Contributor

PA
USA
183 Posts

Posted - 01/19/2013 :  11:22:40 AM  Reply  Reply with Quote
Since we're getting our 1099-MISCs now, I would appreciate any information on which MSCs include reimbursements as compensation on 1099-MISC forms.

This is the first year it's happened to me - for $630 , so I'd like to try to avoid it (and the companies who do it) in the future.

Mine was from ACE.

Maria
Silver certified

TinaMarie
Star Contributor

USA
1811 Posts

Posted - 01/19/2013 :  6:51:20 PM  Reply  Reply with Quote
Why would it bother you to have a 1099 issued? You just report the reimbursement amount under expenses. I report all income, reimbursement and non-reimbursement expenses (office supplies, cell phone service, etc.) and mileage - under Schedule C.

~*~TinaMarie~*~
Go to Top of Page

PamInCa
Star Contributor

CA
USA
6556 Posts

Posted - 01/19/2013 :  6:56:32 PM  Visit PamInCa's Homepage  Reply  Reply with Quote
It is much harder to accurately report your earnings without the 1099. I have never seen a company add reimbursements to my 1099's.

PamInCa
Author of: "The Essential Guide to Mystery Shopping"
Go to Top of Page

MariaPec
Valued Contributor

PA
USA
183 Posts

Posted - 01/20/2013 :  04:50:12 AM  Reply  Reply with Quote
My concern is that most companies do not report the reimbursements as compensation, and yet I now have ONE that does. It just seems to complicate matters for me when my income statements are inconsistently reported. I'd prefer not to raise any red flags for the IRS, thank you very much.

BTW, I emailed ACE about it, and their CEO/ CFO at first said it was an error, then quickly backpedaled when the accounting department replied to me that was how their "tax advisors" told them to do it.

Maria
Silver certified
Go to Top of Page

Cilla
Star Contributor

MD
USA
1433 Posts

Posted - 01/20/2013 :  05:21:44 AM  Reply  Reply with Quote
Over 40 plus years of Self-employment, in several industries, I have seen this problem dozens of times. I have just reported the correct amount of income and attached a note stating that the 1099 was incorrect by that amount. Having done this at least a dozen years, I have NEVER heard a word from the IRS. They are not foolish enough to pursue a few hunderd dollars of discrepancies when there are huge ones needing their attention. It's called "audit priorities." You will not have any red flags.

Edited because when I wrote this I was sick with novo virus and not very alert!

Cilla
MSPA Gold Certified 2005
IMSC Certified 2009
Go to Top of Page

Laura_In_Az
Star Contributor

Tucson, AZ
USA
307 Posts

Posted - 01/20/2013 :  7:12:10 PM  Reply  Reply with Quote
I am not too sure about the IRS having other priorities. I received a detailed letter from them about additional monies I owed them for 2010, due to not reporting a 1099. It turns out that the company sent two different 1099's to them with the exact same amount (less than $4000) and they then calculated that I owed over $1000 more in taxes. I responded that the 1099'd were duplicates and they agreed and I didn't pay more. However, it was stressful and time consuming to respond/copy documents, etc. fyi...I am in the LOWEST tax bracket for income so ...yes,...they go after the little guy. Good luck with splitting out the income and reimbursements. I understand your concern.
Go to Top of Page

Cilla
Star Contributor

MD
USA
1433 Posts

Posted - 01/21/2013 :  06:36:47 AM  Reply  Reply with Quote
Yes, an unreported 1099 will get the IRS' attention. Discrepancies between a 1099 and your declared income from that vendor (MSC) that have a note of explanation attached, are not likely to do so.

Cilla
MSPA Gold Certified 2005
IMSC Certified 2009
Go to Top of Page

DLampkin
Star Contributor

New York City, NY
USA
287 Posts

Posted - 01/21/2013 :  07:44:12 AM  Reply  Reply with Quote
I would be persistent in asking them to reissue you a new one for the correct amount.

Unless it is a case of their shops being just a flat fee, which covers reimbursement and pay? How would that be handled?

~~DLampkin~~
Go to Top of Page

Alan-Texas
Star Contributor

Arlington, TX
USA
542 Posts

Posted - 01/21/2013 :  12:18:23 PM  Visit Alan-Texas's Homepage  Reply  Reply with Quote
quote:
Originally posted by DLampkin

I would be persistent in asking them to reissue you a new one for the correct amount.

Unless it is a case of their shops being just a flat fee, which covers reimbursement and pay? How would that be handled?



When a MSC pays a flat fee that does not include a specific amount for reimbursement, the cost of whatever you are required to buy as part of the shop will reduce the amount of income you end up paying taxes on.

For example, say you were paid $1000 from a company that pays a flat fee for every shop, and you ended up spending $500 to satisfy the purchase requirements for those shops. While your 1099 from the company will say $1000, there is a place on your tax forms where you will enter the $500. The net result will be that you earned $500 doing those shops and you will only pay taxes on that $500.

This will put you on the same footing as companies that pay both a fee and a reimbursement. When they send you the 1099, they are only reporting the fees they paid you. So if, in the example above, the company paid you $500 for your services and reimbursed you $500 for the expenses you incurred, you will only pay taxes on the $500 of income.

The result of the two examples above is the same: you are paying taxes on $500 in net income. The only difference is that the first example has you reporting an additional $500 in revenue and an additional $500 in expenses. The net result is the same.

Maria, the same is true of what ACE is doing. If they have sent you a 1099 that includes both the fees paid to you for your services AND the expenses you incurred doing their shops, you simply report the amount on the 1099 as revenue and then list the expenses you incurred doing those shops. The net result will be the same: you will only pay taxes on the net income.

Alan A.
MSPA Silver Certified
Shopping the Dallas / Ft. Worth area since 2005
Go to Top of Page

MariaPec
Valued Contributor

PA
USA
183 Posts

Posted - 01/24/2013 :  04:21:36 AM  Reply  Reply with Quote
Thanks for the responses. These were clearly offered as $5 fee/up to $50 reimbursement shops and receipts were required. I did persist, and sent an example from the IRS site specifically about reporting independent contractor reimbursements.

I then got an email back saying they reconsidered, and "just this year, and just for me" they would separate fees and reimbusrements. The email said to disregard their 1099, and they would not include me on their final report to the IRS.

I will not include it as income, but I will keep a hard copy of the email with my tax records. Still sounds odd to me, and I don't know how they would explain treating my reimbursements differently from their other shoppers. I hope other ACE shoppers see these posts, since the thread was moved from the Mystery Shopping forum.

Maria
Silver certified
Go to Top of Page
  Previous Topic Topic Next Topic  
 Reply to Topic
 Printer Friendly
Jump To:
Volition Copyright All rights reserved. Volition is a registered trademark of Volition.com LLC. Go To Top Of Page
This page was generated in 0.17 seconds. Software © Snitz Forums