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If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

My form lists a little over 33k as Gross Amount of Payments. So to clarify, I have absolutely zero business transactions processed through "Google Payment Corp". I'm in no way shape or form a small business owner, contractor, etc... However, I do use a product called Google Wallet. I use this product exclusively to send and receive money from friends, family and roommates. Mostly, I buy everything and then have people pay me back using Google Wallet because I simply hate having people pay me back in cash. I live with 5 roommates who are all terrible at money management so I handle all of the household related finances and they give me the money through Google Wallet.

This ranges from collecting rent from everyone else to then pay the landlord, paying all of house hold bills, buying groceries, I pay upfront when we out (which makes for a large bill when 6 people eat together), I generally purchase all of our concert tickets, buy flights, pay for gas on road trips, etc.... 

Additionally, the form is blank in the section where my SSN/EIN/TIN would go.

Any advice on how to handle this situation would be greatly appreciated.

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16 Replies
Carl
Level 15

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

" I buy everything and then have people pay me back using Google Wallet"

Guess what? As far as the IRS is concerned, you are self-employed and your business deals with inventory too. "

"This ranges from collecting rent from everyone else to then pay the landlord"

And you're a landlord who sub-lets property you rent.
@TaxGuyBill you know what I'm going to say. Is there a shortcut around all that? If so, then so long as this continues they'll have to deal with this every single year on their taxes. Double the work if the state also taxes personal income. Not to mention the sales tax they may be required to collect on products they buy/sell.

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

I'm utterly baffled by this. I appreciate the response though.

So because I use a digital service for my friends to pay me back, rather than them paying with cash, I'm considered self-employed? I would be a terrible self-employed person because I have made zero dollars using this. I don't "charge" people, it's simply used as a convenience measure. It's no different than going out to dinner with friends and one person paying the bill, then everyone else paying that person.  Beyond that, I do not sub-lease the property. Everyone, including me, is listed on the original lease with the landlord. I simply collect all funds and then turn them over to the landlord.

It just seems absurd to me that I that I would have to claim an additional 33k in income form something I derived no benefit from other than the convenience of not having to carry cash. Isn't there some kind of documentation that I could turn over to prove this? I have nothing to hide from the IRS. I'd have absolutely no problem turning over my bank records and my Google Wallet records. Luckily I pay for 99% of everything using a credit/debit card so the records exist with my bank.

Obviously this is something I don't want to deal with in the future and will therefore cease the large majority of my Google Wallet transactions in the future.
Carl
Level 15

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

It's not what you and I may think or know. It's what the IRS says and generally, it's not up for debate. I can understand your situation completely. But the bottom line is, regardless of what you, I or anyone else says or does, as far as the IRS is concerned you have 33K of reportable income that if not reported on your tax return, is the equivalent of hanging a sign out that says "HEY! IRS! AUDIT ME NOW! PLEASE! HURRY! FAST! QUICK! I WANT TO PAY LOTS OF FINES, LATES FEES, PENALITES, INTEREST AND BACK TAXES!"
I don't see any way out of not reporting your income on SCH C (and possibly also on SCH E) so that you can offset the taxability of all that money (which may put you in a higher tax bracket too) by claiming and reporting your business expenses, such as the product you "sold". I'm waiting for a colleague to chime in here that may be able to help out and avoid all this SCH E and SCH C stuff. But with such a large amount of "income" reported, I do know that if you don't report it, the IRS will be knocking on your door in no time. If you received a 1099-K, then that income has already been reported to the IRS so they are expecting it to be reported on your tax return. If it's not, disconnecting the door bell won't help.

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

Ah. Thank you Carl. I really do appreciate the honest response.

I guess my main concern was that it would be reported as income without anyway to offset that which is resulting in me going from a $600 refund to a nearly an $11k tax bill. But from your response, it appears that even if it's initially reported as income there should be a way to offset it with expenses (mostly).

As a side note - Do you think I should contact the filer (Google Payment Corp) and provide my SSN? As it stands currently, the form does not contain my SSN (neither masked or un-masked). The last thing I would want to do is go through all of this trouble to expense everything for the IRS to turn around and say, "We don't have a 1099-K for you".

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

See the Terms of Service at Google - "You may only use the Service to process a Payment Transaction for a Product that is purchased from a Seller through a legitimate, bona fide sale of the Product. The Service may not be used to process a Payment Transaction, or otherwise transfer money between a Buyer and Seller, that is unrelated to a purchase of a Product." See <a rel="nofollow" target="_blank" href="https://wallet.google.com/payments/apis-secure/get_legal_document?ldo=0&ldt=buyertos">https://wallet...>

It looks like (and the IRS will see it this way) that you agreed to use the Wallet only for business transactions...hence, the 1099-K.

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

That document is for a separate service called Google Payments, which is strictly for business transactions as the terms indicate.

What I use is Google Wallet (<a rel="nofollow" target="_blank" href="https://wallet.google.com/payments/apis-secure/get_legal_document?ldo=0&ldt=buyertos&ldr=US#SafeHtml...>). Although both services fall under the Google Payment Corp umbrella, they are two distinct services that serve distinct purposes.

If scroll down to section 5.2 of the terms I posted here, you'll see that they distinguish P2P payments and explain it a little better there.

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

In your Settings in Google Wallet, is it possible that you turned on the option "Use Wallet for commercial payments"?. See <a rel="nofollow" target="_blank" href="https://support.google.com/wallet/answer/6285485?hl=en">https://support.google.com/wallet/answer/628...> . Note towards the bottom of the screen, it says, "Google has to report this information to the IRS on a 1099-K form".

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

I've just triple checked that option and it's not set for commercial payments. I've come across that support article as well (even before I received the 1099-K). My impression was that as long as I did not select the commercial option, then I would not be subject to receiving the 1099-K.

Additionally, I checked my Google Payment Center account and my account is listed as an "Individual" rather than a business. It also has "No Tax Info on File" under the United States Tax Info header.

I just attempted to call the Filer's number that is listed on the form for clarification, but unfortunately it say's that they are not accepting calls at this time.

Again, I really do appreciate the responses.
Carl
Level 15

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

The bottom line is, when it comes to your taxes, (Both federal and state, if your state taxes your income) you are self-employed. We can scream, holler, threaten, and all that other stuff all we want. All that money reported to you on the 1099-K is self-employment income, and you were self-employed in 2017 with a sole proprietorship business. Period.

So now you have no choice but to upgrade to the Self-Employed version. Your 1099-K will be reported on SCH C as a part of your personal tax return. Anything and everything you purchased for people is inventory that you now have to claim as such, unless you want to pay taxes on all that income. Then add to the mix rental income which from a business perspective of someone who files a SCH C further complicates matters.

At this point, it is my recommendation (HIGH recommendation) that you seek the services of a CPA, Tax Attorney or Enrolled Agent in your local jurisdiction to deal with your entire 2017 tax return this year. YOu will need to print out every single individual transaction and produce receipts for absolutely every transaction you possibly can, and provide to the person you seek assistance from on this.

Is this going to cost you? You bet! But if this is not done right, the fines, penalties, back taxes and interest will make the cost of professional help seem like a pittance in comparison. Seek professional "personal one-on-one, eyeball-to-eyeball" help on this, yesterday, if not sooner.

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

I've set-up an appointment for Monday morning with an Enrolled Agent as a precaution as soon as I received the letter. I really appreciate all the advice and knowledge that I received from you guys. Thanks!
Carl
Level 15

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

[Edited] There are a fair number of EA's out there who really are good and know their stuff. But it's the few "bad apples" that cast a bad light on all the good ones. Just make sure your apple is a good one, and you should be fine.

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

@kyleallen5000 how did this pan out for you last year?  I'm currently in the same situation and looking for the best approach on this.  Than you in advance.
GL24
Returning Member

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

This same situation is happening to a friend of mine but I think you might have missed the part where the person said that there is a specific button you have to click in order to make your account become a commercial use account.  I think the issue was that they weren't using it for commercial use and yet google essentially treated it as one. My biggest takeaway here is that there is no real answer to the question.  If someone uses the service to split bills it can't be considered income, if anything wouldn't it be reimbursement or considered like some sort of short term loan?  I mean I've paid for concert tickets for a few of my friends on my credit card and they paid me back at a later date, was I supposed to report that as income? <-----(Actual question)    I should also mention that google hasn't sent them a tax form yet, they informed them that they will unless the account is really not being used for commercial use.  So, with this info does it change the answer?  What should my friend tell google to attempt to not have them try to report their transactions?  My understanding is that a pretty big chunk of transactions were because they were holding money for friends, in order to buy vacation tickets, airfare, hotels, etc.  The friend gets discounts on these things, so everyone paid them and they bought all the tickets and such.  

If i received a 1099-K from Google Payment Crop, do I need to include the amount reported on the form? None of the amount listed were received as payments for services.

My basic take on the subject is that is it NOT reportable ... in the original post...  " Additionally, the form is blank in the section where my SSN/EIN/TIN would go."   so if a 1099-K was issued but no tax ID was listed then the IRS has no way to link this back to any taxpayer.  But since we cannot see this form the OP got this is only a guess.  Sadly the IRS is always a bit behind the "electronic curve" ... it took several years to get a 1099-K to be issued so I am sure this needs some tweaking.   

 

Of course most average  people using "wallet" would not have triggered  the minimum requirement to populate a 1099-K ...  https://payable.com/taxes/1099-k-tax-basics

 

Third-party settlement organizations (TPSOs) and third-party payment networks are only required to issue a 1099-K after processing over 200 transactions and paid out over $20,000 to the payee over the course of a year. 

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