Hello, The IRS is coming after me for thinking I made wayyyyy more than I did for this gig app. They made 50k and I made 10k IRS thinks I made the 50K, help!!

[rainystripe]

Basically, I helped the app make 55k in sales while I only took 10k home. Why are they confusing the amount? I spoke to a specialist here a few time before I submitted and everything looked good....

[VolvoGirl]

Did you get a 1099NEC or 1099K for the whole 50k?  How much did you report as income on Schedule C line1?  It should be the grand total.  Then you would expense the difference to come up with a 10k net profit.  

[Critter-3]

" I helped the app make 55k in sales while I only took 10k home"

This statement makes no sense ... how did you "help the app" ?  

[rainystripe]

Sorry for the confusion. 

At the end of the year the app totals how much I 'made' for the shops I did to show how hard we worked it. So in total I made the 55k$ worth of transactions with the company card, I however, am just doing the shopping for them and from that I myself only made 10k. IRS claims they saw I made 55k somehow like I kept it all which I didnt.

[NCperson]

@rainystripe , right, so that 'shopping for them' has to be reported as $40K of expense so that what is left is the $10k if income you  really made. 

[Critter-3]

If you file a Sch C you enter $5K for the income to match what the 1099 the IRS got (which is why you got a CP2000 for the missing income) and report the  $45K as supplies to net out only $10K on the Sch C.   So if you only reported the $10K on the sch C you will amend the return ... make the correction on the Sch C  and return it with the 1040X  with  an explanation of what happened  in response to the notice you got.   Be assured you are not the only person to make this error and you will not be the last. 

[Opus 17]

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@rainystripe wrote:

Sorry for the confusion. 

At the end of the year the app totals how much I 'made' for the shops I did to show how hard we worked it. So in total I made the 55k$ worth of transactions with the company card, I however, am just doing the shopping for them and from that I myself only made 10k. IRS claims they saw I made 55k somehow like I kept it all which I didnt.

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This explanation still leaves a lot of holes.  I can't tell what you mean by using a company card to show how hard you worked, and I wonder what is really going on.

Regardless, if you have $50,000 in gross sales and $40,000 in expenses, you have to report it that way on schedule C.  You can't just report the the net.  And different expenses go on different lines (inventory, taxes, payroll, shipping, etc.).  

If you reported $10K of miscellaneous income, then you also skipped paying self-employment tax.

You may be able to send a new schedule C and schedule SE, along with a PNL or spreadsheet listing your gross income and expenses,  without sending a full amended return.  Or you may need to send a full amended return.  Either way, the IRS wants to see your gross income and expenses.  They may come back and ask for further detailed proof of your expenses.