1099's for Venmo, PayPal, Zelle

[Abigsoxfan]

With the new law for 1099's being issued by Venmo, PayPal, Zelle, etc. for total annual disbursements over $600 how does one report the costs associated with the payments received? Will TurboTax handle this? 

[carmen_t]

That is a very good question!  More details will be needed.  Generally, if self employed, TurboTax has a section for self employed income and a section to enter 1099NEC and 1099K specifically along with related business expenses.  Alternatively, if this is one off payments, that is not compensation I would look at the other income section when exploring types of reportable income.  

[Abigsoxfan]

I am not self-employed, but I do have professional sports season tickets. I split them with others and they pay me in various ways, checks, the above payment methods, etc. I also sell tickets for games I keep but can't attend on StubHub, etc. I also receive payments for shared dinners and shopping I may do for others. No real income generated, but this reporting mess thanks to this obnoxious law with a much too low threshold. So much for going after the "big guys". Thank you for your response. 

[xsnomad]

My internet was out yesterday so I was unable to attend the forum, but your question is the same as mine.  I sell my sports tickets that I can't use, and sometimes there is a small profit but often there is a loss.  However this is not a business for me, so I'm not sure how to report what the tickets cost me.  Most, if not all, of what the 1099 will show is not income at all.

[mdhubel]

What about gifts?

[DoninGA]

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@mdhubel wrote:

What about gifts?

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Gifts received are not reported on a tax return, regardless of the amount received.

Gifts given are not reported on a tax return.  However, if the gift given to a single individual is over the exclusion amount of $16,000 (2022) it must be reported to the IRS using Form 709.

Form 709 is a stand-alone IRS form that is not included with nor sent with a tax return.  It is sent separately from the return and must be filed on or before the due date of the tax return.

TurboTax does not support IRS Form 709.

IRS website for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return - https://www.irs.gov/forms-pubs/about-form-709

[mdhubel]

Sorry, my question was not generic about gifts, it was specific to the electronic payment systems mentioned in the discussion. If I send money in excess of $600, which happens to be gift, won't those people get 1099s?

How about if it's a loan?

[DoninGA]

Gifts given or received should not be reported on a Form 1099-K.  Be sure to note these types of payments as non-business when possible in the payment apps.

Non-business loans should not be reported on a Form 1099-K.  Interest received from the loan is reported on Form 1099-INT.

Review the reporting requirements from a Form 1099-K on this IRS website - https://www.irs.gov/businesses/understanding-your-form-1099-k#shouldnt

To include if a 1099-K is received in error -

You may get a Form 1099-K in error when the form:

• Reports payments that were gifts or reimbursements from family or friends
• Doesn't belong to you or is a duplicate

If this happens:

• Contact the issuer immediately – see FILER on the top left corner of Form 1099-K
• Keep a copy of the original form and all correspondence with the issuer for your records

[mdhubel]

Sorry to try to get my question answered. I think I am misunderstanding the role of these payment applications are playing in issuing 1099s. Please clarify.

[Abigsoxfan]

I understand your point. If you send a "gift" to someone via one of these payment apps and the gift itself or the gift in combination with other payments they may have received is greater than $600 for any one calendar year, it will generate a 1099 for them. Making it a royal pain for them come tax time. Everybody should write their Congressman and have this law abolished or at a minimum have the threshold significantly increased. 

[mdhubel]

Thank you for your answer, however, my issue is not a timing one. Gifts do not require 1099s., and loans do not either. Additionally, since the payor is me and the payee is the recipient having a third party prepare a 1099 does not make sense at all. The Payor is responsible. I agree the law is absurd in that it adds and uninvolved third party...

[Abigsoxfan]

Technically speaking, you are not the payor, the service you are using to gift is the payor. They are responsible for issuing the 1099, not you. And they have no clue what the payment is for, gift, service, product, reimbursement, etc. They don't know, they don't care, the government is just forcing them to do this. Good luck in dealing with this for you or your friend. It is very frustrating and just goes to make all our taxes that much more complicated.