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Old 12-28-2017
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Default How do returns/refund work with 20K annually?

So my question:

If it says you received $20,000 for 2017

and you have $2,000 in refunds.

Will a 1099 be generated since you have only received 18,000 total?

Thanks,
Eric


Where on a business paypal account statements should you look for the REAL # ?
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Old 12-28-2017
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Default Re: How do returns/refund work with 20K annually?

Yes, you'll get a 1099 (assuming your $20,000 in sales was spread over 200 or more transactions). It's based on gross sales. Then you go back and deduct your refunds/fees/other costs.

I'm not sure what you mean by your final question. In your account statements it shows you exactly how much money you've received, refunded, withdrew, transferred, etc. for a given month.
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Default Re: How do returns/refund work with 20K annually?

Go with phaz0rz, and I sure hope you set aside money for your taxes.
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Default Re: How do returns/refund work with 20K annually?

Quote:
Originally Posted by dallis View Post
Go with phaz0rz, and I sure hope you set aside money for your taxes.
So it is too late, if I refund the customers from today for example.....to keep it under 20,000?

A 1099 will already be generated?

Not worried about paying taxes on it, I do not want a 1099 generated from this account.

I am over by a few hundred bucks.
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Default Re: How do returns/refund work with 20K annually?

Quote:
Originally Posted by Jingling2017 View Post
So it is too late, if I refund the customers from today for example.....to keep it under 20,000?

A 1099 will already be generated?

Not worried about paying taxes on it, I do not want a 1099 generated from this account.

I am over by a few hundred bucks.
It's not going to make any difference regardless of how many refunds you send. You grossed over $20k so you'll be getting a 1099k made for you.
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Default Re: How do returns/refund work with 20K annually?

Exactly. Even if you took in $20k and refunded $10k, you will still get a 1099k for the 20k. You just have to to deduct your costs, refunds, expenses, etc....
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Default Re: How do returns/refund work with 20K annually?

if you are a few hundred dollars over 20K collected, pretty good chance you wont get a 1099K. 1099K is for CREDIT CARDS processed only. If people paid from a paypal balance, bank account, echeck, etc... they dont count. Only credit card transactions.
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Default Re: How do returns/refund work with 20K annually?

Quote:
Originally Posted by yankee View Post
if you are a few hundred dollars over 20K collected, pretty good chance you wont get a 1099K. 1099K is for CREDIT CARDS processed only. If people paid from a paypal balance, bank account, echeck, etc... they dont count. Only credit card transactions.
C'mon yankee, that's not accurate. Every 1099 I've ever received from Paypal included every sale from the prior year. Why would we only be obligated to pay taxes on orders paid with a credit card?

This is the rule:

If you exceed both $20,000 AND 200 sales in a calendar year, Paypal submits a 1099k on your behalf. Period.
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Default Re: How do returns/refund work with 20K annually?

Quote:
Originally Posted by phaz0rz View Post
C'mon yankee, that's not accurate. Every 1099 I've ever received from Paypal included every sale from the prior year. Why would we only be obligated to pay taxes on orders paid with a credit card?

This is the rule:

If you exceed both $20,000 AND 200 sales in a calendar year, Paypal submits a 1099k on your behalf. Period.
It is ONLY for credit card transactions by IRS law. It has ZERO to do with how much taxes you pay. Little to no relationship to 1099K and what your tax liability is.
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Default Re: How do returns/refund work with 20K annually?

Quote:
Originally Posted by phaz0rz View Post
C'mon yankee, that's not accurate. Every 1099 I've ever received from Paypal included every sale from the prior year. Why would we only be obligated to pay taxes on orders paid with a credit card?

This is the rule:

If you exceed both $20,000 AND 200 sales in a calendar year, Paypal submits a 1099k on your behalf. Period.
C'MON NOW! How often am I wrong if I post? Lets be real now......

More In File
All payments made in settlement of payment card transactions (e.g., credit card);
Payments in settlement of third party network transactions IF: Gross payments to a participating payee exceed $20,000; AND. There are more than 200 transactions with the participating payee.
New 1099 K Reporting Requirements for Payment Settlement - IRS.gov
https://www.irs.gov/businesses/new-1...ement-entities

Last edited by yankee; 12-28-2017 at 04:56 PM.
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Default Re: How do returns/refund work with 20K annually?

IF you are only claiming income reported on your 1099K and get audited, you will be short paid. Your gross income reported should be a decent percentage higher than your 1099K to be accurate. That is exactly what the IRS is comparing with the 1099K. They are looking for low declarers of gross income.
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Default Re: How do returns/refund work with 20K annually?

With 400+ transactions and only 500 over the 20K, there might be a good chance I don't get a 1099 if what you say is true.

What about VISA debit cards that are linked to a bank, are they treated as credit?

Thanks everyone for your help big time.

Eric
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Default Re: How do returns/refund work with 20K annually?

debit cards process as a credit card are counted. instant bank payments(established paypal buyers) are not. Echecks are not and paypal balances(you know, money already in your paypal account) are not.
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Default Re: How do returns/refund work with 20K annually?

Quote:
Originally Posted by yankee View Post
debit cards process as a credit card are counted. instant bank payments(established paypal buyers) are not. Echecks are not and paypal balances(you know, money already in your paypal account) are not.
OK, so I am probably screwed. Cheap stuff usually use an atm card tied to a bank or credit.

I didn't get any echecks so I know that won't help.

What are instant bank payments? Never heard of this.

Thanks,Eric
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Default Re: How do returns/refund work with 20K annually?

it is impossible to know if the buyer used a paypal balance or instant bank transfer(replaces the echeck and you would have no idea if it came from a checking account or not because it is instant to you)

Instant bank payment is when you fund the purchase from your checking account. Paypal send the money instantly and then withdraws from your checking. Seller never knows. Basiclay, established paypal accounts have this. New ones will still be echeck although they are basically a thing of the past.
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Default Re: How do returns/refund work with 20K annually?

Very interesting info about the credit card payment part for IRS reporting.
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Default Re: How do returns/refund work with 20K annually?

Quote:
Originally Posted by rsot View Post
Very interesting info about the credit card payment part for IRS reporting.
Since we have had 1099K, it has only been 3rd party credit card processed transactions. Always been one of the 4 lines of the law.
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Default Re: How do returns/refund work with 20K annually?

Yankee with that knowledge.

Thank you.


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Default Re: How do returns/refund work with 20K annually?

Quote:
Originally Posted by yankee View Post
debit cards process as a credit card are counted. instant bank payments(established paypal buyers) are not. Echecks are not and paypal balances(you know, money already in your paypal account) are not.
I want to believe you, but what you're saying simply isn't adding up when I compare my previous tax forms to my PP account statements. On the 1099k it indicates these are "3rd party network" transactions and not "payment card" transactions. By definition Paypal is a 3rd party payment network, thus all payments you process with them are reported once you pass $20k.

12/2016 1099k reported : $1
12/2016 PP account statement: $1

This account does mostly B2B. Lots of my buyers pay with their PP balance since their orders are larger than can be processed with their credit/debit card. There is zero chance 100% of my 12/2016 orders were paid with a credit/debit card.

I need you to post better proof for me to accept this as fact and start spreading it on the forum. Right now it still doesn't make sense. If only CC payments were reported I would tell all my big customers to never pay me with a CC ever.
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Default Re: How do returns/refund work with 20K annually?

I dont need to provide anything. You can read the IRS law yourself. I could not care less if you believe me or not. It has no effect on me whatsoever or you really.

I have along with others(Jeff for example) have stated this since I came upon this forum in 2013. Nothing new being spread. In all reality, what difference does it make to anyone? This dude here is panicking because he is using stolen identities and did something reckless.

I can tell you that I have never one time had a 1099K from paypal that matched my withdrawals to bank accounts. It is off 10-15% Also gross sales on ebay never match 1099K

If you want proof, simply call paypal and ask them or call the IRS.....or read the law. It is only 4 lines.

I personally only take checks or bank transfer for wholesale orders. I have them text me a check, I print it and mobile deposit. If they owe me more than $2500, I make them write multiple checks. Get my funds the next day.
If they have Bank of America, they do zen pay and i get paid within seconds. Other pay instant transfers, etc... One small buyer makes cash deposit at his local branch in Miami. No paypal fees etc...and I get my money as fast or faster.

IF I am buying with paypal say over seas, I ONLY use a credit card for the 2% cash back I receive. If you demand your buyers to never pay credit card or paypal credit, etc...It would be impossible to know anyways.
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Default Re: How do returns/refund work with 20K annually?

https://www.irs.gov/businesses/under...ng-your-1099-k

Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS information return used to report certain payment transactions to improve voluntary tax compliance. You should receive Form 1099-K by January 31st if, in the prior calendar year, you received payments:

from payment card transactions (e.g., debit, credit or stored-value cards), and/or
in settlement of third-party payment network transactions above the minimum reporting thresholds of –
gross payments that exceed $20,000, AND
more than 200 such transactions
What does my Form 1099-K report to me?

A Form 1099-K includes the gross amount of all reportable payment transactions. You will receive a Form 1099-K from each payment settlement entity from which you received payments in settlement of reportable payment transactions. A reportable payment transaction is defined as a payment card transaction or a third party network transaction.

Payment card transaction means any transaction in which a payment card, or any account number or other identifying data associated with a payment card, is accepted as payment.
Third party network transaction means any transaction that is settled through a third party payment network, but only after the total amount of such transactions exceeds $20,000 and the aggregate number of such transactions exceeds 200.
The gross amount of a reportable payment does not include any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts or any other amounts. The dollar amount of each transaction is determined on the date of the transaction.

NOTE: The minimum reporting thresholds of greater than $20,000 and more than 200 transactions apply only to payments settled through a third-party network; there is no threshold for payment card transactions.

What should I do with this information?

It is important that your business books and records reflect your business income, including any amounts that may be reported on Form 1099-K. You must report on your income tax return all income you receive from your business. In most cases, your business income will be in the form of cash, checks, and debit/credit card payments. Business income is generally referred to as gross receipts on income tax returns. Therefore, you should consider the amounts shown on Form 1099-K, along with all other amounts received, when calculating gross receipts for your income tax return.

In addition --

Check your payment card receipt records and merchant statements to confirm that the amount on your Form 1099-K is accurate
Review your records to ensure your gross receipts are accurate and reported correctly on your income tax return
Determine whether you have reported income from all forms of payment received, including cash, checks, and debit, credit and stored-value card transactions.
Maintain documentation to support both the income and deductions you report on your income tax return
Do any of these statements apply to the Form(s) 1099-K you received?

The Form 1099-K does not belong to you or is a duplicate
The payee Taxpayer Identification Number (TIN) is incorrect
The gross amount of payment card/third party network transactions is incorrect
The number of payment transactions is incorrect
The Merchant Category Code (MCC) does not correctly describe your business
If so, consider the following:

If the Form 1099-K does not belong to you, contact the Payment Settlement Entity (PSE) listed on the Form 1099-K to try determine why you received the document. The name and telephone number should be shown in the lower-left part on the form. If a PSE name and number are not shown, contact the Filer at the number shown in the upper-left corner on the form. Retain any correspondence with the PSE
If there is an error on the form, request a corrected Form 1099-K from the PSE. Keep a copy of any corrected Form 1099-K you receive with your records as well as any correspondence with the PSE
What should I do when the total gross payment amount shown on Form 1099-K does not belong to me?

In some cases, the total gross payment amount on Form 1099-K may not belong to you. The following examples illustrate such situations and provide information that may help you determine how to account for the amount of gross payments shown on the Form 1099-K you received.

If you report your business income on Form 1120, 1120S or 1065 and you receive a Form 1099-K in your name:
If you report your business income on a Form 1120, 1120S or 1065 and you receive a Form 1099-K in your name as an individual (showing your social security number), contact the PSE listed on the Form 1099-K to request a corrected Form 1099-K showing the business’s TIN. In addition, request that the PSE use the business’s TIN on all future Forms 1099-K. Report the income from the Form 1099-K along with any other sources of income on the appropriate income tax return. Retain all correspondence with the PSE to show that this error was corrected.
If you shared your credit card terminal with another person or business:
If you shared your credit card terminal with another person or business, your Form 1099-K will include payment card transactions belonging to the person or business that shared your terminal, in addition to your own payments. Where required, you should file and furnish the appropriate information return (e.g., Form 1099-K or 1099-MISC) for each person or business with whom you shared a card terminal. The information return should include the total payment card transaction amount in addition to any other income belonging to the other person or business. You should retain records of payments issued to each person or business sharing your terminal, including but not limited to shared terminal written agreements and cancelled checks.
If you bought or sold your business during the year:
If you bought or sold your business during the year, your Form 1099-K may include payments for transactions made before you purchased or after you sold the business. This can occur when the tax identification number and business name associated with a credit card terminal are not updated with the new owner’s information. You should request a corrected Form 1099-K from the PSE/Filer listed on the form. Its name and telephone number are on the form. Also keep a copy of corrected Form(s) 1099-K with your records and retain the purchase or sales agreement that substantiates the timing of the ownership change.
If you changed your business entity structure during the year:
If you changed your business structure during the year, such as incorporating or converting from a sole-proprietorship (Schedule C) to a partnership (Form 1065), or vice versa, and continued using the same card terminal, the amount shown on the Form 1099-K will not correspond with your new entity’s tax return. Be sure to timely notify your merchant acquirer of any change to the name and tax identification number that links the terminal to your current business structure. Be sure to maintain documentation to support the correct income and deductions for both business entities.
If you allow your customers to receive cash back when they use their debit cards for purchases:
If you allow your customers to receive cash back when they use their debit cards for purchases, the Form 1099-K you receive will include those cash back amounts as part of the gross amount of payment card transactions. Generally, you would not include cash back amounts as part of your business’s gross receipts on your income tax return, nor would you claim such amount paid to a customer as a business expense. It is important that you maintain records of customer cash back activity over the course of your tax year.
If your business (or businesses) has multiple sources of income:
If your business (or businesses) has multiple sources of income, you may report business income on more than one line of a return or on multiple returns or schedules. For example, assume you operate a retail business and also have rental income. You accept payment cards for both businesses, but because you have only one credit card terminal to process these transactions, your 1099-K will include gross payment card receipts for both businesses. You should use your books and records to ensure that all gross receipts are reported on the appropriate line or schedule. In this case, the gross receipts from the retail business should be reported on Schedule C, and the amounts related to the rental activity included in the rental income reported on the Schedule E.
More Info
If you have questions about the amount reported, contact the filer (see the upper left corner of Form 1099-K). If you have questions about the merchant or third party transaction network, find the contact in the lower left corner of Form 1099-K.

FAQs on Payment Card and Third Party Network Payments
1099-K Reporting Requirements for Payment Settlement Entities
Third Party Reporting Information Center
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Default Re: How do returns/refund work with 20K annually?

AND HERE is a 2015 amendment to the 1099K. Maybe now all third party payments are reported. Still irrelevant to anything really.
https://www.irs.gov/payments/general...g-requirements
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