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 Please explain the $600 minimum amount for 1099 rule
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AngieC
Member

IN
USA
11 Posts

Posted - 01/08/2004 :  11:59:05 AM  Reply  Reply with Quote
Looking for a little tax help out there:

I know one company I am working for that my dollar amount will be over $600 the minimum amount you can draw as an IC. I know that I may get several tax forms from certain companies. Do you add all the money you made as an independent contractor and see if the sum is over $600 dollars and list the total amount on your federal tax return or is the $600 per each individual company? Do I have to track each company separately if I get a tax form from that company?

Peter T. Sanderson
Valued Contributor

Pawley's Island, SC
USA
150 Posts

Posted - 01/08/2004 :  12:49:00 PM  Reply  Reply with Quote
It is the company that is not required to send 1099's for less than $600. This number has no bearing on your taxes or tax return.

Wether or not the company sends you a 1099 has no bearing on what you file as taxable income.

Your taxable income is ALL income made from ALL companies. If you use the cash basis, as most do, this is all income received from 1/1/03 to 12/31/03.


NOTE: if a company mails you a check on 12/25, then that amount would be on the 1099. But you get it on 1/3, so you do not claim it as income till the next year. So, what you file may not even match your 1099s. This is why you need to keep good records of what you received and when.
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Kimmy
Member

USA
35 Posts

Posted - 02/15/2004 :  09:02:46 AM  Reply  Reply with Quote
So, does this mean that ANY amount that I earned last year is taxable? Even if it was only, let's just say $25.00? I just started MS in the middle of the year last year and I haven't had to deal with this yet. I am a stay-at-home Mom and I do not have any other income. I haven't calculated my total yet but I know it is only a few hundred dollars from several different companies. Is it all taxable regardless of how small the amount? Thanks for any advice.

Silver Certified, Shopping from Huntsville to Birmingham, Alabama
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.Nicole
Inactive

Burnsville, MN
USA
144 Posts

Posted - 02/15/2004 :  09:49:09 AM  Reply  Reply with Quote
Kimmy,
It actually all depends on who you ask. I asked a CPA that I know and he told me you only have to claim anything if you make 599 dollars in one year. I also learned this when I was in college in an tax accounting class. Now if you ask the IRS they will probably say you do have to claim it. If you already itemize your return or have someone do your return it will not make a difference in your taxes if you claim your income and then take the mileage deductions that you can take and so forth. But, my advice is if you made a small amount not to claim it if you do not want to. Now remember it is not 599 a company it is 599 all together including reimbursments. Hope this helps!

Shopping Minnesota
Gold Certified lmfgsr
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Peter T. Sanderson
Valued Contributor

Pawley's Island, SC
USA
150 Posts

Posted - 02/15/2004 :  10:06:30 AM  Reply  Reply with Quote
quote:
Originally posted by Nicole

I asked a CPA that I know and he told me you only have to claim anything if you make 599 dollars in one year....Now remember it is not 599 a company it is 599 all together including reimbursments.
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.

Before you take someone's advice on not reporting all your income, read:
Tax dilemma: Did not report income from company I did not get a W2 from and now the IRS knows.
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.KenInSac
Inactive

Sacramento, CA
USA
104 Posts

Posted - 02/15/2004 :  3:20:07 PM  Reply  Reply with Quote
Nicole,

Sorry to ruin your theory, but Peter is absolutely correct. If you make $15 on jury duty, you are supposed to report it. If you make $5 filling out a survey, you are supposed to report it. Any money that you earn is taxable and reportable income. If someone gives you money without you doing anything for it, then it is a gift, and may not be reportable (and is not taxable to you). But if you did something to get the money (e.g., you entered a contest and won), it is taxable money that needs to be reported.

Ken (not an accountant)

Ken
MSPA Gold Certified Shopper
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DorothyB
Contributor

Houston, TX
USA
64 Posts

Posted - 02/15/2004 :  5:22:40 PM  Reply  Reply with Quote
I'm a CPA, although I do not do tax work. Because I'm not up on all of the current tax regulations, I do not usually give advice.

However, I am well-versed in this particular part of the tax code. Peter is correct - ALL income is taxable. The $600 rule is a rule for the companies we work for, NOT for us. They are not required to issue 1099's for small amounts, but may if they choose to. Whether we get a 1099 or not, we are supposed to report ALL income.

DorothyB / TX
MSPA Silver # zxgteb
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Kimmy
Member

USA
35 Posts

Posted - 02/15/2004 :  7:06:32 PM  Reply  Reply with Quote
Thank you to everyone for the advice. I will plan on reporting it then. I'm sure the total will not be but $300-$400. Like I said earlier, I do not have any other income. But I had rather be safe than sorry. It is still a little blurry on the reimbursement part. I think I will just show them as a wash. (unless I spent more, hum?) See, there goes another topic all together. I have also seen mixed feelings on this. It's all pretty confusing isn't it?

Silver Certified, Shopping from Huntsville to Birmingham, Alabama
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.Nicole
Inactive

Burnsville, MN
USA
144 Posts

Posted - 02/16/2004 :  10:17:40 AM  Reply  Reply with Quote
Thank you everyone also for the correction! I am going to contact the CPA that I spoke to to make sure I understood him correctly! I understand that it makes since that we should have to claim all income, but it was not what I was told. I am glad that people are there to correct me when I am wrong! Thanks

Shopping Minnesota
Gold Certified lmfgsr
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Jeff
Member

Fort Worth, Texas
USA
26 Posts

Posted - 03/23/2005 :  2:23:41 PM  Visit Jeff's Homepage  Reply  Reply with Quote
All income from self employment is reportable. All expenses must be taken. If your net self employment income is less than $400 then you would not have to file form SE. That is the form that figures Social Security and Medicare for the self employed. If you have to file a form SE then you do have to file a tax return. This is explained further in Publication 17 about page 11. I am an EA and I prepare over 1500 tax returns a year.

Jeff
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MelodyB.
Contributor

Fort Drum, NY
USA
81 Posts

Posted - 10/30/2005 :  11:52:43 PM  Reply  Reply with Quote
OK - so as mentioned above, a person that does surveys and gets $2 here, $1 there etc...how does that get filed? If they don't shop....just do surveys then they can't be considered in business right? So where on the tax papers would that go?

Second question: lets say a person takes only reimbursement shops....do they have to claim anything at all? I'm so confused on this lol.

I was shocked last year at the cost that H&R block charged due to my shopping. I was too afraid to do my own taxes (as I normally do) since I had just started shopping. The extra paperwork and cost was enough to scare me away....is this normal?

A newbie trying to get started in up-State New York =o)
(Can shop military!)
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ChrisT
Star Contributor

USA
1513 Posts

Posted - 10/31/2005 :  12:13:27 AM  Reply  Reply with Quote
Try turbotax(or other online software) next year if you have low income. It's free to file federally if you meet the income requirements. I love it, I can manipulate figures real time and see how it increases or decreases my tax refund. I got a bigger refund by doing this. I don't think I would've got as much using the paper forms.

ChrisT
Deliriously Happy Shopping Uncertifiable
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KathyV
Member

Rural Central, Texas
USA
30 Posts

Posted - 10/31/2005 :  04:14:05 AM  Reply  Reply with Quote
Remember that all Income is reported but that you deduct your expenses also. So your income is offset by your milage. I recommend Taxact Deluxe it walks you through what you need to fill out a 1040.

So let's say you recieve $400.00 but the milage was 242.00, your actual taxable income would but the difference. Any other expenses you used can also be deducted. I am not an accountant but I have done my husband's farm for years, it is not too hard. The farm is harder we have depreciable items on different rates.

Silver Certified,NARMS Certified, doing only Merchandising now locally
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Gretta
Star Contributor

Jacksonville, NC
USA
1557 Posts

Posted - 02/06/2007 :  8:27:36 PM  Reply  Reply with Quote
I'd think that survey money that is earned would be reported under other income at least on the 1040 form. There is a differant line for schedual C income.
I realize if I file a schedual C I would most likely come up with a loss. However since I'm sure when I add it up I made less than $100 MSing, can it be reported as other income without filing a schedual C? I need to go look for a schedual C, either at the post office or on the IRS website and print one out to see how complicated it is going to be. And I do file my taxes by paper and pen and mail it in.
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LindJorg
Star Contributor

Tacoma, WA
USA
921 Posts

Posted - 02/06/2007 :  8:44:02 PM  Reply  Reply with Quote
You can use the sch CEZ.......and it is simple enough but if you choose to just report it on the 1040 under other income,,,,you can not claim any expenses.

Linda
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Gretta
Star Contributor

Jacksonville, NC
USA
1557 Posts

Posted - 02/06/2007 :  8:48:38 PM  Reply  Reply with Quote
I figured I couldn't take expenses if I claimed it as other income. Didn't know about the CEZ form. I shall have to check it out also. Thank you.
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Kathy B
Trainee

Philomath, OR
USA
6 Posts

Posted - 03/03/2007 :  1:26:33 PM  Visit Kathy B's Homepage  Reply  Reply with Quote
Please bear with me, I am new. so if I have 4 companies that I made less then 599.00 with. and two companies I made more than that, I have to claim it all?? I was told I only had to claim for the companies I made more than 599.00 with and not worry about the others. That is one reason I started with the business. Oh dear. I am a bit worried now. thank you for your help.
Kathy
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SJones
Star Contributor

USA
3117 Posts

Posted - 03/03/2007 :  3:09:02 PM  Reply  Reply with Quote
Kathy, you have to report all income, if your total income from all sources (including your full-time/part-time job, if you have one) is more than $600. Thus, in your case, not only do the companies count, where you had more than $600, but also those, where you had less than $600. Even if for each company you worked for, you had less than $600, but as a total, you had more than $600, you will have to report ALL.

Susanne
MSPA Silver Certified!
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JenF66
Star Contributor

Hooksett, NH
USA
254 Posts

Posted - 03/10/2007 :  06:30:07 AM  Reply  Reply with Quote
Another thing to keep in mind is that if you make more than $400 from all sources you are supposed to pay self-employment taxes.

Jen
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Cath
Star Contributor

USA
703 Posts

Posted - 03/28/2007 :  11:46:42 PM  Reply  Reply with Quote
KathyB and SJones....As some of the previous posters stated, you must report the income. That means if you only make $100 you still have to report it. The company that contracts you to work only has to send a 1099 if they pay you $600 or more. If you earn less than $600 that does not mean that you don't have to report it. Now, you may have deductions and expenses to offset the earnings, but you are still responsible for reporting the money you made.
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Charles1322
Apprentice

Blakeslee, PA
USA
1 Posts

Posted - 04/06/2007 :  11:13:48 AM  Reply  Reply with Quote
So if you go over 400. dollars you have to pay social security taxes too. is that income figure after or expenses gas and supplies are subtracted from your total income?
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