Using Zelle to receive payments which will be over $50,000 a year.

[skully9999982]

I will be receiving around $50,000 a year and plan to use Zelle to receive the payments. I feel that Zelle is super easy to use and goes straight into my bank account which I like. I will be receiving payments from many different people. How will it work for the 1099-k and 1099-misc? How will they send it to me?

[macuser_22]

Not sure what you are asking.

You must report all self-employed income reguardless of the payment method or whether you receive a form from the payer or not.  1099-MISC forms are only issued by other businesses that pay you more then 600 in a year.   a 1099-K is not actually entered into a tax return, but the income reported on it, if received, must still be entered under the proper category for that income.  The method of payment is not material.

[Anonymous_]

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@skully9999982 wrote:

How will it work for the 1099-k and 1099-misc? How will they send it to me?

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You should really ask Zelle --> https://www.zellepay.com/support/contact

Regardless, as @macuser_22 stated, you are required to report the income irrespective of whether you receive any type of tax reporting statement. Having said that, Zelle should actually not be sending out any such statement since it is merely a cash transfer system.

[skully9999982]

I appreciate the response. I'll try to explain more in depth. I am doing some online work for different people and I am under 18 so seems as if Zelle is the best option. Many of the people will be sending me over $600 in a calendar year but what happens if for some reason they (people I work for) do not send me a 1099-misc? Also, I can fill out a 1099-k by getting the form from turbo tax correct? Another thing, if you have any better payment options you know of for someone under 18 it would be greatly appreciated (not venmo and paypal since you really need to be over 18 for them).

[macuser_22]

As I said above, a 1099-K does not go on your tax return.  It's purpose to to report to the IRS that such payments took place.  The taxpayer must enter the payment, whether or not a 1099-K was received.  a 1099-K can report income for many different types of income and that income must be reported in the proper place for that type of income.

Whether Zelle must issue a 1099-K  depends if the IRS considers them to be a PSE.

Per the IRS instructions for a 1099-K:

Specific Instructions
A payment settlement entity (PSE) must file Form 1099-K,
Payment Card and Third Party Network Transactions, for
payments made in settlement of reportable payment
transactions for each calendar year. A PSE makes a
payment in settlement of a reportable payment
transaction, that is, any payment card or third party
network transaction, if the PSE submits the instruction to
transfer funds to the account of the participating payee to

Who Must File
Every PSE or other party which submits instructions to transfer funds to the account of a participating payee, in settlement of reportable payment transactions, must file an information return (Form 1099-K) with respect to each participating payee for that calendar year.
settle the reportable payment transaction.

[macuser_22]

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@skully9999982 wrote:

 Many of the people will be sending me over $600 in a calendar year but what happens if for some reason they (people I work for) do not send me a 1099-misc? Also, I can fill out a 1099-k by getting the form from turbo tax correct?

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No, you cannot fill out a 1099-K since you are not a payment settlement entity (PSE) .   Failure to file a 1099-K is between the IRS and Zelle.   It makes no different to you if you receive a 1099-K or not since it in only information to you even if you do receive one.

As I said, only businesses issue a 1099-MISC in the course of doing business - individuals do not issue 1099-MISC forms.    If a 1099-MISC is required, it is sent directly from the business that pays you to you.   You must report all income whether you receive a 1099-MISC or not.  

[skully9999982]

Zelle does not send the 1099-k - I will have to download from turbo tax and fill out myself I am assuming. Since I am receiving more than $600 from many individuals I am not sure how that will work for a 1099-misc? What if the individuals do not send to me for some odd reason? 

[skully9999982]

So if Zelle doesn't send me a 1099-k or 1099-misc (which they wont) I do not need to file them? and I should just file my income tax?

[macuser_22]

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@skully9999982 wrote:

So if Zelle doesn't send me a 1099-k or 1099-misc (which they wont) I do not need to file them? and I should file my income tax?

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Did you read my posts above?  I answered those questions.

[skully9999982]

Yes, I was just clarifying. Also, not sure if I stated but I am under 18 doing online work which is why I will be receiving this amount of money. Besides Zelle do you recommend any other things where I can receive payment and be under 18? paypal and venmo do not seem like a good option at the moment.

[macuser_22]

As I said, the method of payment is in material.   What is important is you keep a good ledger of your clients, payments, dates of work, receipts, etc.   If audited, you must be able to prove everything on your tax return.

The simplest payment method is by check, payable to you (or your business) which is the easiest to prove when deposited into your bank account.

Your age is not material.   You are aware, aren't you, that on self-employed income over $400, you must pay a separate SE tax in addition to the income tax (medicare and social security) which is 15.3 percent of your earnings.

[skully9999982]

Yes, I am aware. I have all documents regarding clients, payments, dates of work, receipts, etc. I just do not know what to use since I am under 18 and most company require the individual to be over 18.

[skully9999982]

Yes, I am aware. I have all the documents regarding clients, payments, dates of work, receipts, etc. I just am not sure what to use since most company require the individual to be over 18.

[VolvoGirl]

Your age doesn't matter for your tax return.  Here's some self employment info.

You need to report all your income even if you don't get a 1099Misc or 1099K. You use your own records.  You are considered self employed and have to fill out a schedule C in your personal 1040 tax return for business income.   You use your own name and ssn or business name and EIN if you have one.   You should say you use the Cash Accounting Method and all income is At Risk.   

After it asks if you received any 1099Misc it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records.  Just go through the interview and answer the questions.   Then you will enter your expenses.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf

[VolvoGirl]

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed  return....

http://quickbooks.intuit.com/self-employed

also if you are going to make that much you should send in quarterly estimated payments.  Since they don't take withholding out of your pay like if you work as an employee.

You must make quarterly estimated tax payments for the current tax year if both of the following apply:

- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:

    90% of the tax to be shown on your current year’s tax return, or

  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year you start with your current return, but be careful not to change anything.  For Online versions, if you can't get back into your return, Click on Add a State to let you back into your retun.

The 1040ES quarterly estimates are due April 15, 2019, June 17, Sept 16 and Jan 15, 2020.  Your state will also have their own estimate forms.

Here are the blank 1040ES forms and instructions

https://www.irs.gov/pub/irs-pdf/f1040es.pdf

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2019 Estimate