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Form 1099

Hello,

I have a question about form 1099. Since Odesk is no longer sending out the form, does it mean that I have to file it myself?

Thanks

Vote Result

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Score: 7.0, Votes: 5
Did you get this email?

Here is a copy of an email I got from oDesk.

Quote:

We’re writing to let you know about a recent tax law revision affecting U.S.-based contractors.

In the past, those earning more than $600 on oDesk were sent a 1099-MISC earnings report. But because of a change in the tax code, we will not be sending a 1099-MISC this year.

To help you report your 2012 taxes, we created a special Earnings by Client Report where you can easily access your yearly financial summary.

For more information on the updated tax laws that may affect you, please refer to this article or visit the IRS website. And if you have any questions for us, don’t hesitate to get in touch!


You just file your taxes the way you normally do. You always have to report all earned income.
I think they are sending a 1099K to the IRS. I saw that in this email that they sent to me:
Quote:

We’re writing to let you know about a recent tax law change that will affect some U.S.-based contractors.

There is a new form called the 1099-K which applies to those earning over $20,000 and with over 200 transactions in a calendar year. Because you fall into this category, we will be mailing your 1099-K which should be received by January 31st.

We also created a special Earnings by Client Report to give you easy access to your yearly financial summary.

For more information on the updated tax laws that may affect you, please refer to this article or visit the IRS website. And if you have any questions for us, don’t hesitate to get in touch!

"You always have to report

"You always have to report all earned income."

So, let's say, I had 16 contracts with different clients in 2012 for the total of $5,170. However, only 3 of them paid me overall more then $600.

So should I report only these 3 (as I earned more then $600 from them) or all 16 (with total earned $5,170)?

What do you think?

Report all earned income

You have to report the full $5,170. Even if you were paid for your work in cash or in goods bartered, the IRS requires you to report *all* income, regardless of whether you got a form from the person paying you.

From an oDesk client's

From an oDesk client's perspective:

Form 1065 Schedule B, line 18a, Did you make any payments in YYYY that would require you to file form(s ) 1099? Form 1099-MISC is usually required if we paid contractors over $600.
- oDesk says No 1099-MISC is needed, per live chat.
- From my research, IRS list exceptions to 1099-MISC at http://www.irs.gov/instructions/i1099msc/ar02.html
- note exception of “payments to a corporation”
- one of our oDesk invoices asks that we pay to “oDesk Corporation”, who I think then pays the freelancer.
- Another source also states the same thing, “Reporting such payments is required if the recipient of the payment is not a corporation...Prior to [2012] repeal, reporting would have been expanded to include payments made to corporations” http://taxes.about.com/od/businesstaxes/qt/1099-Misc-Reporting-for-Miscellaneous-Payments.htm
- I think this only applies to oDesk and other sites like it.
- However outside of oDesk and even with the 2012 tax changes (http://www.bnncpa.com/resources/library/form_1099_update_rules_are_relaxed_for_rental_activity_and_purchase_of_good) “in the context of a trade or business, cumulative payments to a recipient for services of at least $600 still require a Form 1099-MISC”

Other references:
https://support.odesk.com/entries/23159118-Am-I-responsible-for-filing-tax-forms-for-my-freelancer-
https://support.odesk.com/entries/23147347-Who-receives-a-1099-form-from-oDesk-

Fascinating!

This is particularly interesting because there is no change in the rules that I know of that states if you make over %600 that they are not to issue 1099's. I don't like this one tiny bit.

I want a 1099 and I am legally entitled to a 1099. This is NOT good in my opinion.

The IRS website shows this:

Quote:
Like Share Print
Form 1099-MISC, Miscellaneous Income
File Form 1099-MISC for each person to whom you have paid during the year:
At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest;
At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
Any fishing boat proceeds; or
Gross proceeds of $600 or more paid to an attorney.

So this "ruling" DOES NOT include independent contractors though "other income payments" does fall in that category.

So...

Does this mean my clients have to issue their own 1099s instead of oDesk doing it for them as in the past? If so, then they better lower their 10% fee because they are providing less service.
Wonder if someone will answer??

Yeah

But the IRS knows this is not going to happen, reread that rule carefully. By the literal meaning of that rule:

Everytime your car breaks down and it costs you over 600$ you have to file a form 1099 for your mechanic.
Everytime you go to court and your lawyer is paid more than 600$ you have to file a 1099 for the lawyer.
If you hire a baby sitter,
Maid,
Take your car to a carwash more than 600$ worth in a year.

Much more, I think you get the point, when is the last time you filed a 1099 on your landlord for the rent you paid? These things just are not done, it is your responsibility as the taxpayer to claim all income.A 1099 is just a tool the IRS uses to make sure people are paying what they are supposed to. You do not claim all of your income and someone has filed 1099's on you for more than you claimed, audit time.

They are filing under the new 1099-k guidelines, so if you do not make more than 20,000 you will not get anything. You can view these new guidelines here Form 1099-K.

Form 1099-K. Payments made with a credit card or
payment card and certain other types of payments,
including third party network transactions, must be
reported on Form 1099-K by the payment settlement
entity under section 6050W and are not subject to
reporting on Form 1099-MISC. See the separate
Instructions for Form 1099-K.

Feel free to google the 1099-k rules, no point in me posting a link that will get deleted.

Here is a link to IRS's site

Here is a link to IRS's site on Understanding Your 1099K

"The 1099-K is an IRS information return for reporting certain payment transactions to improve voluntary tax compliance. You should get a 1099-K by the end of January 2014 if, in 2013 you received payments from:
payment card transactions (e.g., debit or credit cards)
in settlement of third party payment networks (i.e., online sellers) above the minimum reporting thresholds
-gross payments that exceed $20,000, AND
-more than 200 such transactions."

If you are an independent contractor, the trade or business should continue to report payments made to you on Form 1099-MISC as they have done in the past. No Form 1099-K should be issued.

Read More at:

http://www.irs.gov/Businesses/Understanding-Your-1099-K

So does this mean...

Without a 1099 we can't file our taxes correctly? Am I missing something?

You do not need a 1099 to file your taxes

You do not need a 1099 to file your taxes. You do not send it in with your taxes. You just need to report your earning on your income tax self employment form.

Okay, thanks!

I was becoming confused there on what the purpose of it is, unless it is to itemize, maybe?

I'm kind of nervous to file taxes on this, this year, as it is my first full year of doing total freelance online with Odesk. I can't hardly believe an entire year has gone by since I began working here; then, my other online business ventures...it seems intimidating.

Anyway, babbling over, thank you again for letting me know about that form.

I think that the information

Margaret P. wrote:
You do not need a 1099 to file your taxes. You do not send it in with your taxes. You just need to report your earning on your income tax self employment form.

There is information on the 1099 - Payers name, Payers Tax ID number and other information that is supposed to be included if I'm not mistaken. I'm not too sure how this is going to work.

I have several writing sites that I contribute to and every single one of them has issued a 1099 form. I would like an explanation from oDesk about WHY we're not getting one. I have not received any Email telling me we're not getting one.

I am waiting too

I am waiting to hear back from a ticket I sent asking if my clients now have to send me the 1099-MISC. No answer yet.
If the clients have to send the 1099 they will need our SSN which I am not ready to hand out.
EIDT: this is what I heard back from oDesk.

Quote:

oDesk now sends the 1099-K form instead of the 1099-MISC, for which the eligibility requirements are different. All US contractors must file a W9 so that a 1099-K can be sent to them, if applicable.
so I think this goes into payments from 3rd parties box on Schedule C. But it appears you only get one if you earn more than $20,000 based on the email I got from them.
So.....confusing.

Clear as Mud!

Yes, that's as clear as mud! I'll wait until 1/31 and see if one shows up. I might even give it a few extra days just to make sure then I will email oDesk to find out where it is ... no point in worrying about it at the moment I guess

I am confused too.

I have done up my taxes the way that oDesk seems to indicate they should be done, claiming the income but without using the 1099. I haven't filed them yet because that just doesn't seem to jive with how it should be done.

I hope everyone can collaborate on some good answers here.

Simple

I use paypal for everything, every site I work with and every individual client. Come this time of year my taxes are already done, no need to wait for a 1099. I also use paypal for all of my purchases. I just print out my paypal statement for the year and hand it to my accountant, he figures out what is business what is personal and how much income I had. Taxes done. 1099 form copies sent into the IRS at this point reflect my reported incomes, in fact less than, so there is no audit issue to worry about as I always end up claiming more than 1099.

As a freelancer you are running a business, tax forms for every transaction are not always involved in business, but you still have to report all income. Let a professional accountant handle it. It costs me about 250$ per year to get my accountant to handle my stuff, there are cheaper but I like the one I deal with. Using an accountant you can just point the IRS to him if there is ever a question and you can not worry about it.

I use TurboTax to file my

I use TurboTax to file my taxes. Where should I report my freelance income then? Tried to file form 1099K but would not let me.

There should be a place

For other income. But when you are in business for your self (freelancer included) the services of an accountant can not be undervalued! Accountants can do some tricky things that are perfectly legal. Mine tried to explain it to me once but I was just like ... OK whatever thanks for saving me money lol.

He does something like reverse calculates the fees these sites take, includes the whole thing as my income, then counts the fees off as business expense and somehow it works out better. I dunno i'm not a tax guy but he does a great job.

You do not pay the fee

Your accountant is subtracting something you do not pay. The client pays the fee. Hope you never get audited.

My understanding

from another thread somewhere is contractors claim the gross income on the Schedule C, and also on the Schedule C claim the expenses of the fees. So the end result is it nets out to actually what went into your pocket.

There are no fees on oDesk

The contractor pays no fees on odesk. Tell me what fees you pay? Your client pays the fees and the CLIENT gets to claim them on his/her taxes.

Umm no

Using the rules the accountant is using, the 10% fee oDesk takes out from YOUR rate is like paying an agent if you are an actor, and is YOUR business expense.

As we have a "bill rate" Charles is right

We have a "bill rate" and it is what the client pays, and from which oDesk deducts the 10% - As we "bill" the full rate (fixed rate and / or hourly) and our "earnings" are shown (on the profile, for example)at that bill rate the 10% are actually a business expense assuming that the full bill rate is declared as "earnings" rather than the payment amount.

Obviously one can't take the amount paid by oDesk and THEN try to deduct 10% from that as expenses. I wasn't sure so I ran it past a former accountant(don't ask Wink ..) and he confirmed this.

Technically the oDesk charge is not paid by the client, but by the contractor. The client does "the paying" but the 10% is calculated based on, and deducted from, the contractor's bill rate, so it's the contractor's expense, not the client's. The client can deduct the full bill rate as an expense. The contractor can deduct the 10% that is being taken out of the "bill rate."

Same net income

If you report your "earnings" with the additional 10% and you also report that additional 10% as an expense, wouldn't you get the same net income number as just reporting your actual earnings and not reporting the expense?

(I + y) - (E + y) = Net profit

I - E = Net profit

I may be missing something, but what's the point?

The net amount is the same.

The net amount is the same. But the difference in reported turnover could have an effect on other things.

If you cash out via Paypal,

If you cash out via Paypal, Paypal charges you $1 to get your money via oDesk. I've received money from other places/people and don't get charged.

1099 Mystery: Maybe I accidentally found the answer

I found this on PayPals website today:

Quote:
Internal Revenue Code (IRC) Section 6050W states that all US payment processors, including PayPal, are required by the Internal Revenue Service (IRS) to provide information to the IRS about certain customers who receive payments for the sale of goods or services through PayPal. PayPal is required to report gross payments received for sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year. In order to help you understand these changes, we have prepared the following FAQs.
The FAQS are here.

This may be the reason oDesk (and other sites) are not issuing 1099 forms. I have only one other site who has refused me a 1099 form, most of them have issued them and I have them in hand.

not relevant

This only applies to payment processors, as it states. Has nothing to do with oDesk.

Actually it is relevant

Al Lefcourt wrote:
This only applies to payment processors, as it states. Has nothing to do with oDesk.

If you withdraw your earnings to a payment processor and you get a 1099 from them, then you may also get a 1099 from oDesk which in fact DOUBLES your income.

Here's the info I received from one of the sites I contribute to with the name redacted:

Quote:
The IRS recently made a change involving payments made by credit card or 3rd party payment services like Paypal. The good news is, this is one of the rare moments where the IRS actually simplified things!

Due to the recent changes, it is now the responsibility of the payment processors to report payments to the IRS, not the entity that used the payment processor to send the payment. However, that being said, most of you will NOT be getting a 1099 from Paypal, because they will only send you a form 1099-k if you were paid more than $20,000 and had 200 transactions in a single year.

Before the recent IRS changes, REDACTED would have been required to send you a 1099 if we paid you more than $600 in the year. However, with these new changes, REDACTED is not required to send you a 1099 form. In fact, if we did send you a 1099 form, it's possible your income would be reported twice, once by us and once by Paypal, and you could owe more taxes!

(emphasis mine)

no reply from oDesk regarding 1099s

I also filed a ticket with oDesk Help on 1/31, the usual deadline for receiving 1099s, asking where my 1099 was. No reply other than to say it is "being reviewed." While waiting for a response which still hasn't come - more than a week later - I pulled out my tax filings from last year to make sure oDesk does provide 1099s. I did get one from them last year. Finally I dug through my emails and the found one from them that was quoted above. Pretty much cleared everything up. Thanks to whoever posted it above, as I'd forgotten all about it and it answers all of our questions. I will still be asking my CPA about some details though, and I second the suggestion above about using a CPA. If you are in business for yourself as a freelancer, you absolutely need one!

Not sure this is correct

Update: Doing my own research at irs.gov turns up no evidence that oDesk should not be sending us 1099-Misc.

Note to the person above who said you don't need a 1099 to file your taxes - yes, you do not NEED one, but it sure helps. It lets us know what our clients have reported to the IRS as our income. If your records and theirs don't agree, and you report two different amounts, both of you may end up being audited.

oDesk should be telling us what they report to the IRS whether it is the law to do so or not. Which I *think* it still is in any case.

Expect another update after I speak with my CPA next week to see which way is up.

Smile

Okay, here's the skinny...

I spent some time in Chat with a very helpful oDesk rep and got the answer I (we) need.

Rather than using the Earnings by Client report - despite it saying "helpful at tax time" -- go to Wallet, click the link to the Transactions, and set the timeframe to Jan 1 - Dec 31, and there will be a total at the bottom. That's the number to use.

I know this because the total on my 2011 Earnings by Client report does not match the 2011 1099-Misc I got from oDesk, but the total I get when I follow those instructions for 2011 is exactly right.

Yay! Smile

1099

BTW, I DID get a 1099-MISC from another non-oDesk client this year, so it's not that the form went away. It's just that oDesk is choosing not to send them.

Yes

Al Lefcourt wrote:
BTW, I DID get a 1099-MISC from another non-oDesk client this year, so it's not that the form went away. It's just that oDesk is choosing not to send them.

Most of my other clients are electing to send them under the theory that they cannot easily determine IF a contractor meets the threshold of the payment processors.

I am of the opinion that oDesk is in violation of IRS rules by NOT sending one but that's my personal opinion.

Form 1099

I was told by an odesk rep to fill out my own 1099 misc. But that isn't right, they need to fill it out as they need to send a copy of the form to the IRS. I am so confused. I understand that they are not required to give us a 1099 but that does not mean they can't. They are definitely screwing us and making filing taxes more complecsted than it already is.

What's more if they are a third party payment processor, then that would mean that we need to request the 1099 misc from our clients on odesk, which I'm sure they will love. Has anyone asked thier client for a 1099 misc ?

You do not need a 1099 to

You do not need a 1099 to report your income to the IRS. You are responsible for calculating all of your income and reporting it and for keeping your own financial records. It does not matter whether it is on a 1099 or not. I get paid directly by UK clients (no relation to oDesk), who know nothing about the IRS and have never heard of 1099s. I have to convert the amounts to dollars myself and report them. Every time I get paid by anyone, I record it on a spreadsheet. I can't get away with not reporting income to the IRS just because there's no 1099.

Simple to do a search on the

Simple to do a search on the help files on who and who doesn't get a 1099.

The Details

Although most freelancers will not receive IRS forms, there are a few exceptions:
Freelancers earning over $20,000 with more than 200 transactions – These folks will receive a new form called the 1099-K. Under the Internal Revenue Code (IRC) Section 6050W, oDesk will file a 1099-K form to the IRS for US-based freelancers earning over $20,000 USD and with over 200 separate transactions in a calendar year. They will receive a copy of their 1099-K via US Postal Service by January 31 in order to accurately report their taxes.
W-2 employees – W-2 workers with employee status must be hired through oDesk Payroll. If you’re hired through the oDesk Payroll service, we handle all of the withholding and payment of taxes for you.

https://support.odesk.com/entries/23147347-Who-receives-a-1099-form-from-oDesk-

1099 fORM

Here's my problem I filled out the 1099 MISC on Turbo Tax and it needs an EIN number for me to continue to do my deductions as a freelancer, I have researched and found Different EIN's How do we get the EIN if we do need it to fill out the 1099 misc form

I'm not quite following you

I'm not quite following you here. Whose EIN do you need? Someone you've hired?

Did you actually get a 1099MISC Form?

oDesk does not send out 1099MISC anymore so then why are you filling it in? I'd say you are doing your Turbo Tax wrong.
You only fill that in IF you actually have a physical 1099MISC in your hand.

Then where would we put the money earned?

So if we don't have 1099-Misc from the contractors nor from odesk, then we just claim that money earned in some other place? I have found that there is not any other place to put it on the taxslayer.com site that I am using. Anyone have any luck finding where to put that money on their tax form? I can't claim it on a 1040 because that requires W-2 forms. Thanks for any help!

Line 21-Other Income

Line 21 on the 1040 says "OTHER INCOME", put it there. No need for a W2 on that line.
Or you can fill out a Schedule C. I consider freelancing my business and am a registered business in my state. Since I use my home for it, I can take off quite a lot in deductions.
If you are still lost I strongly suggest you see a tax professional.

1040 Line 21 in Turbo Tax

Hi, I'm wondering what option people are using to populate line 21 on 1040 using Turbo Tax? I'd like to avoid having to use Turbo Tax Home & Business just to ensure that I report my freelance income. Thx!

Turbo Tax

Faith M. wrote:
Hi, I'm wondering what option people are using to populate line 21 on 1040 using Turbo Tax? I'd like to avoid having to use Turbo Tax Home & Business just to ensure that I report my freelance income. Thx!

If you don't have a home you are deducting Interest for your payments or your tax payments to you can use Turbo Tax Deluxe and it will calculate what you need.

EIN

Chance W. wrote:
Here's my problem I filled out the 1099 MISC on Turbo Tax and it needs an EIN number for me to continue to do my deductions as a freelancer, I have researched and found Different EIN's How do we get the EIN if we do need it to fill out the 1099 misc form

You file your 1099-K on Turbo Tax under Other Income and you do not need an EIN unless you are doing business under a DBA. If you are using your own name to work you use your Social Security Number. If you need an EIN you can apply for one at

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online