raise.com 1099-k

Old Jan 31, 18, 5:55 am
  #1  
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raise.com 1099-k

I received a tax form from Raise. Any one else experience this? I don't know if I made any profit last year but I did a lot of transactions. What should I do?
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Old Jan 31, 18, 6:53 am
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You need to know what profit, if any, you made in order to report to the IRS anyway. So I'd suggesting working that out then consult a tax professional regarding disputing the characterization of transactions reported on a 1099-k.
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Old Jan 31, 18, 6:55 am
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Originally Posted by sponge_gto View Post
You need to know what profit, if any, you made in order to report to the IRS anyway. So I'd suggesting working that out then consult a tax professional regarding disputing the characterization of transactions reported on a 1099-k.
If I kept a detailed spreadsheet that has my cost paid and what I sold it for and a c/p valuation -- is that enough? I also used only one card so you can see what I spent and my purchase history from ebay is pretty clear. Is this something I could do myself without a tax professional?
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Old Jan 31, 18, 10:19 am
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Normally I'd be content to just report the profit from my spreadsheet but your situation is complicated by the fact that you now have a 1099-k stating numbers that are different from the profit figures in your spreadsheet. It is really the disputing of the characterization that I think you need to be extra careful with. Either diving into the legalese or getting help is what I would've done in your situation.
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Old Feb 6, 18, 3:33 am
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Thanks Nathan for "raising" this question. I too completed a "lot" of transactions (for me anyway) with Raise (and TPM) last year. AFAIK, I've not yet received a 1099-k from either platform/service, though I seem to recall Raise has/had a policy wherein they will send one out for high volume sellers who completed over 10k in sales. If indeed I get the 1099-K, I'm not sure what sponge_gto is asserting. My hunch is that the 1099K is not understood as a statement of "profit" per se, but a statement of gross sales completed. That's why we're to have detailed transaction records in order to tabulate profit/loss from each and all transactions completed during the tax year. Apart from the requisite record keeping involved, not sure why the tax reporting on this necessitates consulting a tax pro.... Yet curious to learn from other bulk sellers on their experience and practice. (even more so if you're in a state with a GRT -- e.g. Virginia, Ohio)
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Old Feb 7, 18, 8:58 am
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I agree with havai above, the 1099k doesn't provide any detail on income that needs to be reported on your tax return, rather it shows you the amount of payments you received. The 1099k is a tool the IRS uses to help them understand what sort of payments business' are making to other business' or people. You should try to calculate the profit that you made on the giftcard sales and include that on your tax return. Keep in mind that after taking into account costs of acquiring the gift cards (driving, shipping, etc.) and costs to send the gift cards to Raise you might not have much income to report. I would say that credit card points or cash back wouldn't need to be included in income since there is no precedent for the IRS trying to tax credit card points on spend.
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Old Feb 7, 18, 9:12 am
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Originally Posted by NathanL104 View Post
If I kept a detailed spreadsheet that has my cost paid and what I sold it for and a c/p valuation -- is that enough? I also used only one card so you can see what I spent and my purchase history from ebay is pretty clear. Is this something I could do myself without a tax professional?
I'm not sure what sponge_gto is talking about, there's nothing really complicated about your situation. People get 1099s for all sorts of things.
If you keep a spreadsheet outlining the cost you paid and amount you received that is definitely sufficient (if you have other expenses, hopefully you tracked those as well). To properly report the income you'll likely need to fill out Sch. C, though I suspect you'd only have amounts on a few lines.
https://www.irs.gov/businesses/under...ng-your-1099-k
https://www.irs.gov/forms-pubs/sched...-from-business
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Old Feb 7, 18, 10:35 am
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Originally Posted by TyPo311 View Post
I agree with havai above, the 1099k doesn't provide any detail on income that needs to be reported on your tax return, rather it shows you the amount of payments you received. The 1099k is a tool the IRS uses to help them understand what sort of payments business' are making to other business' or people. You should try to calculate the profit that you made on the giftcard sales and include that on your tax return. Keep in mind that after taking into account costs of acquiring the gift cards (driving, shipping, etc.) and costs to send the gift cards to Raise you might not have much income to report. I would say that credit card points or cash back wouldn't need to be included in income since there is no precedent for the IRS trying to tax credit card points on spend.
Don't take tax advice on the internet. Most big time gift card resellers reduce their cost basis by cash back earned on cards.
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Old Feb 7, 18, 11:48 am
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I remember reading with eBay/PayPal sellers that eBay and/or PayPal would send a 1099-K to the IRS and user if there were more than $20,000 in sales in a year AND more than 200 transactions. Many unlucky sellers who did not claim their eBay/PayPal income would get letters from the IRS saying back taxes were owed on the entire amount of the 1099-K gross sales (with a large part of the amount owed being 15.3% Social Security + Medicare taxes), as if their cost of goods sold was zero. Then they would have to rebut the IRS's demand letter specifying cost of goods sold or else pay taxes on the full amount of gross sales as if it was all profit. Of course, this is rather crude of the IRS to assume the reported gross sales is pure profit, but the sellers in question failed to report any profit which is tax evasion.
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Old Feb 7, 18, 1:34 pm
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I read some of those reports mentioned by @dealhunter32 on ebay community board, IIRC. I will try to look for it if I can find them.

For GC resellers who use it as means to MS, it is important to keep detailed records of ALL transactions for tax purposes. As mentioned above, best not to ask for tax advice on the internet; instead, ask a CPA/tax professional to get proper advice. For whatever it's worth, one of the GC buyers is having cash flow problems. I am not one of their clients but in our slack group, I've read of several issues with them (poor communication, bounced check was predominant) that's why I decided not to go into GC reselling. It is best to be updated at all times regarding issues with GC buyers to avoid problems.
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Old Feb 9, 18, 8:41 am
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Originally Posted by hamokmonky View Post
Don't take tax advice on the internet. Most big time gift card resellers reduce their cost basis by cash back earned on cards.
Yeah it's probably not smart to take specific advice on the internet related to taxes, yet the underlying issue remains, if you get a 1099k you really need to report the income on your tax return.
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Old Feb 14, 18, 7:28 am
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Thank you for the replies. Luckily 99% of this was done through paypal and I can pull spreadsheets that details exactly what I spent. I can then cross reference that to my credit card statements and the Raise yearly summary that says what I was paid. Actually, this was a useful exercise because it showed me I lost money last year (albeit a small amount compared to the miles/points received). I will file a schedule C through turbo tax and just hope the IRS doesn't target me. If they do, however, I have the proof to back up I didn't make any profit. I don't know what else to do, omitting the 1099K would cause even bigger problems down the road.
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