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  1. #1
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    I've done AM on a small scale in the past--earned a few dollars a month, so taxes were pretty easy. I'm doing it on a larger scale this year, and have a question.

    When it comes time to declare our income, this comes right off of the 1099-MISC forms that merchants and affiliate networks send out, right? As a follow-up question, the amount declared on these forms is only what they've actually paid out, right? For instance, my December commissions won't be on there since they won't be paid out until January or February, right?

    Many thanks!

    Michael

  2. #2
    Chick with Brains Tracy's Avatar
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>When it comes time to declare our income, this comes right off of the 1099-MISC forms that merchants and affiliate networks send out, right?<HR></BLOCKQUOTE>

    Correct. If you are being paid as an individual (your social security number is your tax id number), and have been PAID $600 or more in a 'Calendar' year, IRS requires that whoever paid you issue a 1099.

    However, if you are a corporation and have a Federal ID number, and are receiving payments in the corporation's name, no 1099 is required.


    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>As a follow-up question, the amount declared on these forms is only what they've actually paid out, right? For instance, my December commissions won't be on there since they won't be paid out until January or February, right?
    <HR></BLOCKQUOTE>

    Individuals pay taxes on a cash basis. So yes, only what you were paid during the calendar year would be included on the 1099.

    Some corporations maintain their books on the accrual basis. In their case, not so.

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  3. #3
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Tracy:
    Correct. If you are being paid as an individual (your social security number is your tax id number), and have been PAID $600 or more in a 'Calendar' year, IRS requires that whoever paid you issue a 1099.<HR></BLOCKQUOTE>

    That's what I thought. I'm running my business as a sole proprietorship, so I'm filing on my individual return.

    Question about the $600. Is this $600 *total* or for each merchant? For example, if I make less than $600 from Overstock.com, then they don't have to send me a 1099-MISC and I don't have to claim them? Not trying to avoid paying taxes--just curious how it all works.

    Michael

  4. #4
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    EmDub,

    If the merchant is in a network (such as Overstock with LS), your 1099 will come from LS and will include all commissions from their merchants paid to you during the year. Only if the merchant is an independant wil you get a 1099 from them.

    Nick

  5. #5
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by nick farrell:
    If the merchant is in a network (such as Overstock with LS), your 1099 will come from LS and will include all commissions from their merchants paid to you during the year. Only if the merchant is an independant wil you get a 1099 from them.<HR></BLOCKQUOTE>

    Is Reporting.net the exception, then? The only previous experience I have is with BN.com and Staples.com affiliate programs. They're both with Reporting.net, yet I received a 1099 from BN.com. I didn't make enough with Staples, so no 1099 from them.

    Thanks for all of the great info!

    Michael

  6. #6
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    Even if you don't get a 1099, report it on your income tax!!! IRS knows what went into your bank account even if the Merchant is careless and doesn't send you the 1099. He'll get a slap on the wrist, but you'll end up in a Federal Coountry Club. Serious .. report it!!!!

    Even if you make a little from one or little bits from lots of merchants and they don't HAVE to send you a 1099, include them in your income too.

    Bernie,
    Ex-accountant,
    daughter of an auditor

    [This message was edited by Bernie on November 19, 2002 at 10:05 PM.]

  7. #7
    Chick with Brains Tracy's Avatar
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    I agree. I run my business under a corporation and every penny received is reported even thought I don't receive any 1099 forms. It's not worth it if one or both of you gets audited. That's not to say that you shouldn't take every legal expense as a deduction against the income you received. My favorite is depreciation!

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  8. #8
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    Tracy, I was editing my message as you were posting yours to agree, so was happy to see your reply when I posted. It really bothers me every year at this time when I see the question about not having to declare income if the Merchant doesn't send a 1099.

    I operate as a Sole Proprietor, should have incorporated in Year2000 when Affiliate income was great and even reported $30K from a merchant who went bankrupt but paid me in 2001 even tho they never did send me a 1099. But if they'd paid me $5.00 I would have reported that too!

    It's called "peace of mind", right?

    Bernie

  9. #9
    Chick with Brains Tracy's Avatar
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    Exactly! Or what goes around, comes around.

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  10. #10
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    Just so you don't all think I'm trying to get out of paying taxes, I'm not! I was just curious how others on this board handle the situation. I keep very good records--each check is photocopied before it is deposited, and every expense is noted. I plan on stating *all* of my commissions as income--I was just asking questions! [img]/infopop/emoticons/icon_smile.gif[/img]

    My main question was answered--exactly which income to claim on my taxes. The answer is checks that are actually cut to me during the calendar year. My goal is to forecast how much that will be so I can plan my deductions appropriately.

    Thanks for all of your help!

    Michael

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