paypal 1099
1099, Being Freelancer, Finances and Taxes, Self-Employed, Taxes

Paypal and 1099s

Over the years, Paypal has become more and more popular as a payment processor between independent contractors and clients. As we approach tax season, many freelancers are faced with a new question: how do you handle income from Paypal? How do you handle 1099s if most of your transactions conducted via Paypal

Many independent contractors this year will receive a Paypal 1099. If it’s your first time dealing with this type of 1099, you’re in the right place. Here are 4 things you need to know about Paypal 1099s.

There are many types of 1099s

There are many different types of 1099s. All 1099s serve the same purpose of reporting income and earnings. A 1099-MISC is the most common for freelance income. You might also come across a 1099-INT for your bank interest. For income processed through Paypal, you will receive a 1099-K. A 1099-K is for income processed through “payment card and third party network transactions”.

You can learn more about the 1099-K on the IRS website here. You can also view a sample of the form here.

The Paypal 1099 is new

The Paypal 1099 or the 1099-K is a fairly new document. In the past, income from payment processors, such as Paypal, wasn’t being captured. However, the number of paypal users grew increasingly over the years, especially those who used the service to transfer business income. As this presented a problem in itself, the IRS set up the 1099-K specifically to capture this income.

You may not meet the requirements for a Paypal 1099

Even if you did receive income through Paypal, you might not receive a 1099-K. Paypal is only required to send a 1099 to users who earned more than $20,000 in income and had more than 200 transactions. Both requirements have to be met in order for you to receive a 1099-k.

If you don’t receive a 1099-K but did receive income through Paypal, you should still report these earnings on your Schedule C.

Don’t forget about Paypal commission

If you do receive a 1099-k, one thing you should take into account are Paypal commissions. The total listed on your 1099 may include commission. If so, Paypal should tell you specifically how much and give you a breakdown of the total. On your Schedule C, you should report this commission as both income and an expense. This would result in a net of $0 and therefore, you wouldn’t have to pay taxes on this commission.
If you have questions specifically regarding your Paypal 1099, you can reach out to their customer service directly for help.

1099, Companies, Freelancers, Health Care, Your rights: Presidential Election, Laws, etc.

On-Demand Economy’s Companies Need to Provide Job Benefits

You’ve probably heard of Uber, Airbnb and Handy before. These are just a few companies in the on-demand economy that have grown rapidly over these past few years. As a result of the increased demand, more and more freelancers are taking on multiple ‘on-demand gigs’, even stringing together multiple gigs to replace a full-time salary. While these jobs provide flexibility, one of the main drawbacks is lack of benefits. On-demand workers aren’t protected like their salaried counterparts.

In the On-Demand Economy, the need to improve job benefits and workers’ protection for self-employed workers and independent contractors is now being noticed. Recently, the labor group National Domestic Workers Association (NDWA) announced the “Good Work Code”, a pledge to help freelancers and improve their jobs with more transparency, better wages, and increased support. Twelve companies have now signed it, including DoorDash, Care.com and LeadGenius.

While more and more companies are joining this pledge and those similar to it, the largest ones have yet to make an effort, including Uber, Lyft and Handy. Time will tell if the increased pressure from other groups and on-demand companies, as well as support from political powers, will change their minds.

The Good Work Code is seen as a step in the right direction for on-demand workers. It addresses many of freelancers’ concerns and challenges but at the same time, also fails to make actionable steps to fix them. Their goal is to get politicians and companies talking about to fix this larger problem and more importantly, how to change it.

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Freelancers
1099, Being Freelancer, Companies, People

Risk Profiles of Freelancers Versus Non-Freelancers

Originally published by Steven King at Emergent Research

There’s lots of people criticizing independent work these days as being too unpredictable, risky and all around bad for both workers and the economy.

But a pattern we’ve noticed is almost all the criticism comes from people with traditional jobs. This got us thinking about risk profile differences between independent workers and those with traditional jobs.

In the 2013 MBO Partners State of Independence study we surveyed non-independent workers asking them about their views of independent work. The results were quite interesting.

First, non-independent workers see the advantages of independent work as, well, less advantageous than independent workers do.

Risk profiles 1

Second, non-independent workers see the disadvantages as being much greater. As the chart below shows, for every category mentioned non-independents see bigger challenges than independent workers.

Risk profiles 2

One of the more fascinating findings was that half of the non-independents considered “having to invest their own money” as a major challenge. For independent workers, so few listed this as a challenge it didn’t make the top 10 challenges list, so it was scored as “not applicable”.

It’s clear from this an other research that, on average, independent workers and non-independent workers have different risk profiles. The bottom line is:

Independent workers are more comfortable than non-independents with the risks associated with being independent and more willing to accept these risks in return for greater work autonomy, control and flexibility.

This is why the majority of independent workers are satisfied and happy as independents and prefer independent work over traditional employment.

Going forward these risk profile differences raise a very important issue.

Our work indicates most Americans fall into the more conservative risk profile category. Our work also indicates those with conservative risk profiles are less likely to be successful as independent workers.

But as the economy shifts to greater levels of contingent employment, more people with risk profiles not suited for independent work will become independent workers. This is a key reason we need new policies and programs to make independent work safer and more secure.

So when reading or hearing people talking about how bad independent work is, keep in mind risk profiles. The chances are the critic has a risk profile that biases them against independent work.

But also keep mind without making independent work safer and more secure, growing numbers of Americans will likely struggle at work going forward.

Being Freelancer, Finances and Taxes, Industry Research

Mr/Mrs: 1099 Are you better off?

Source: 1099 Workforce Report

For independent contractors, the 1099 group, the main question is ‘are you better off working in the on-demand world or settling on a full-time job. As the research below shows, the challenge for the Task Rabbiters / Free Agents is finding enough work, understanding their legal obligations and maximizing their schedule. Also understanding how to think about their health benefits is another challenge.