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YanBz
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Form 1099-MISC Update (new for 2011 tax year, IRS section 6050W)

submitted on January 27, 2012 by YanBz in "Buxr Website / Contests"
It appears those of you who earned over $600 in prizes will not be receiving 1099-MISC this year from Buxr. IRS has changed regulations in such a way that payments made via Paypal and gift cards have now been excluded from 1099-MISC reporting.

You might however receive a 1099-K form from Paypal and/or Amazon instead (which you then use in your tax return). The changes affect Internal Revenue Code Section 6050W and have been enacted since January, 2011. Here are sources to go for additional information:

Overview of changes at IRS:
http://www.irs.gov/govt/fslg/a.....94,00.html
Complete text of the rules at IRS:
http://www.irs.gov/pub/irs-utl.....al_reg.pdf
Paypal FAQ about 6050W:
https://cms.paypal.com/us/cgi-.....s/IRS6050W
Thomson Reuters newsletter:
http://onesource.thomsonreuter.....-article6/
Intuit Payroll Support about the change:
http://payroll.intuit.com/support/kb/2001238.html
     

Favorite (4)
  Comments
  • 141364
    bemicmom
    professor
    6 3 4
    10 9 2
    Posted by bemicmom on January 27, 2012
    [reply] 2 0
    So now the Total amount should be over $20000 total earnings in PayPal . Am I right?
  • 141369
    YanBz
    admin
    Posted by YanBz on January 27, 2012
    [reply] 3 0
    The new regulations stipulate that two conditions must be met in order for the "third party settlement" organization (which is what I believe Paypal and Amazon are in this case) to be required to report the transactions as 1099-K:

    1. The transactions total amount exceeds $20,000, and
    2. Aggregate number transactions exceeds 200
      141370
    • onkarkulkarni
      professor
      9 4 4
      11 8 2
      Posted by onkarkulkarni on January 27, 2012
      [reply] 3 0
      wow, that's a welcome rule change from the IRS!
    • 141371
    • bemicmom
      professor
      6 3 4
      10 9 2
      Posted by bemicmom on January 27, 2012
      [reply] 2 0
      That's a great News...party time.
  • 141374
    onkarkulkarni
    professor
    9 4 4
    11 8 2
    Posted by onkarkulkarni on January 27, 2012
    [reply] 1 0
    So it basically means we can earn upto $19999 within a year and not report it?
      141848
    • mdoneil
      learner
      1
      Posted by mdoneil on January 31, 2012
      [reply] 2 0
      No, you have to report it, however paypal or ebay or whomever don't have to 1099 you.

      FYou must report all income.
  • 141386
    pablos17
    deity
    2 4 6
    10 8 2
    Posted by pablos17 on January 27, 2012
    [reply] 1 0
    Woo hoo! Artistic
  • 141393
    clover
    professor
    1 6 7
    12 11 2
    Posted by clover on January 27, 2012
    [reply] 2 0
    Thanks Yan! That made my day and it has been a rough one.
  • 141398
    psplove
    professor
    3 1 6
    11 9 2
    Posted by psplove on January 27, 2012
    [reply] 1 0
    Sounds great. Thanks for good news.
  • 141852
    YanBz
    admin
    Posted by YanBz on January 31, 2012
    [reply] 2 0
    I want to clarify my post, as it seems to be misinterpreted. Even though starting with this year we don't send out 1099's, as mdoneil correctly noted above, you still need to report your extra income on your tax return. This post was in no way meant to suggest otherwise.
  • 167815
    YanBz
    admin
    Posted by YanBz on January 26, 2013 [reply] 0 0
    It's the tax time again, and this is a reminder that you will not be receiving a 1099-MISC form from us.

    Here is one more link I dug up recently: http://www.cliftonlarsonallen......1099s.aspx
    Relevant quote:

    The instructions for Form 1099-MISC indicate businesses should not complete Form 1099-MISC if the payment is already reported on a 1099-K (in other words, if the business paid for the service using a credit or debit card or other third party network). But you’ll still have to use the form to report other methods of payment.


    Since all the prize payments from Buxr go via a third party network (like Paypal or Amazon) we will not be issuing 1099-MISC forms to the winners.

    That said, you still need to report your prizes as income in your tax return. You can see the history of payments on "My Prize Payments" page at this link: http://www.buxr.com/prize/payments
  • 167849
    CouponNut
    deity
    23 14 8
    12 10 2
    Posted by CouponNut on January 27, 2013 [reply] 0 0
    I guess you could say paying the paypal fee is as good paying a small tax amount! Smile
  • 168942
    YanBz
    admin
    Posted by YanBz on February 14, 2013 [reply] 0 0
    Bumping up this discussion since more people have been asking me about 1099.

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