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Pshaw2321
Level 1

1099 "income"

I've been struggling with the reporting by Square and other card processors on the 1099 form as "income".  I am an independent consultant for a direct sales company.  I purchase my product from the company to resell at the same price I purchased at.  Then I earn commission from them for my "sales".  They report my commission income on a 1099 form annually, but then my card processor also reports my sales as income as well, when in fact, I'm re-selling product, and not making income on the re-selling but reducing already purchased inventory.  So the IRS is receiving earnings notification from my Direct Sales company AND my card processing company.  And it doesn't seem either fair or accurate.  But it's still a requirement.  Can someone help me understand how this is actual income?

1 Reply
Laura_CPA
Employee Tax Expert

1099 "income"

Dear Pshaw2321, 

 

Hope you are having a good day 🙂. We understand that it can be confusing, but only you know how your business operates (no one else). I'd suggest to take some time to analyze your business operations and financials. For example take your 1099 income and compare it to your accounting records (or QuickBooks). Then, make a note of the differences.  You will report your 1099 gross income on your Schedule C and if your 1099 includes expenses (product you purchase to resell it), then back it out as an expense. The IRS only knows about your income, it does not know about your expenses, only you know how you handle that part. So in order to clear it up, you'll have to let them know what is income and what is not, the best way is to communicate that is via a Schedule C by entering your income and your expenses. 

 

We hope this helps you, please let us know if you need further information. 

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