mam98031 • Volunteer Community Member • Buyer/Seller since 1999
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1099k have always only reported payments made by buyers. If you cancelled a sale before it was paid, it was never represented in a 1099k. But if you cancelled a sale that was paid, then it is represented in the 1099K numbers.
This form reports ALL money that came into your MP account. It does not reduce for refunds, shipping costs, or fees. You need to deduct all of that.
1099K do NOT report Gross Sales. It has always reported Gross Receipts.
1099k have always only reported payments made by buyers. If you cancelled a sale before it was paid, it was never represented in a 1099k. But if you cancelled a sale that was paid, then it is represented in the 1099K numbers.
This form reports ALL money that came into your MP account. It does not reduce for refunds, shipping costs, or fees. You need to deduct all of that.
1099K do NOT report Gross Sales. It has always reported Gross Receipts.
@camerasandmoremn wrote:Yes, I'm reconciling transactions that were paid and subsequently canceled - this is usually the "a buyer wants to cancel an order" email received within an hour or two of sale. In previous years these numbers have matched and I was trying to figure out why suddenly my receipts were higher then the 1099k.
One possibility is that the $$s represented on the 1099K is the amounts released in Payouts during 2023. So you need to really look at the first Payout for sales you may have reported in 2022 and the final Payout of 2023 for the sales in late December that may not have made it in your final Payout released.
To avoid confusion for myself, I report income to the IRS in the calendar year. I just keep records on my 1099K reconciliation on what I've done so that I have the support if I ever need it.
I doubt that is the case.
OP said they get cancellation requests in 1-2 hours. As I know you are aware, buyers that file a formal one within an hour it is different for those that do so after the hour is gone. With that said, I've had buyers asked to have their transactions cancelled within the first hour of purchase, but did not do it the formal way and simply sent an email.
Ebay confirms a payment will fund before they notify the seller that the buyer has paid. "Pending" on our MP accounts is there to allow Ebay to get the money from the buyer's funding source and get it literally into the account.
The 1099K has to be a simple process or it will get way to complicated for everyone. And it is simple. It represents the TOTAL amount of funds that came into a MP account without consideration to cancellations, refunds, shipping costs or fees.
The 1099K only represents funds received by the seller that have actually had the Payout sent [not received]. You can see this on the policy page, however for some reason Ebay calls it the Settlement Date. However Settlement Date = Payout date.
@donnasfinds wrote:Of course it would be nice if eBay actually told everyone exactly how they calculate the gross amounts reported...as opposed to letting us speculate.
But they do. Have you ever read the policy page? Many forget that Ebay has a policy for just about everything, we just need to look it up.
Keep in mind that Settle date = Payout date. Not the date you receive the money into your bank, but the date Ebay releases the Payout.
What's included in Form 1099-K
As Form 1099-K is an IRS information return, it includes the gross amount of all reportable payments within a calendar year, based on when funds settle to eBay, not necessarily when funds are received by sellers. This amount does not include any adjustments, for example, credits, discounts, fees, refunds, or any other adjustable amounts. This means that the gross amount on your Form 1099-K may not be the final reportable amount on your tax return. You should consult your tax advisor to determine how best to use the information on your Form 1099-K when filing your personal and/or business income tax return.
If there's an issue with any transaction on your Form 1099-K, you can contact us with the item number and any relevant information about the transaction.
Additionally, Form 1099-K does not include the sales tax when it is automatically collected and remitted by eBay.
https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794#
@donnasfinds wrote:thank you. I appreciate the info and yes, I'm realizing there's more info available than I thought earlier. I'm learning. My main frustration comes from eBay leading me to believe there would be no 1099-K reporting, then out of nowhere, there it is. Sorry for the earlier rant.
OK Not Ebay's fault. Ebay has kept us all informed as changes happen. Whether we read about these changes is another thing, but Ebay can't make us read stuff and stay current.
The initial law for the threshold on the 1099K for 2023 was $600. IRS did not change that until December 2023 and temporarily changed it back to the old rule of $20,000 and 200 transactions. So I'm really not sure as to what you are suggesting Ebay did or didn't do.
Either way, as far as reporting income, it really doesn't matter. The 1099K is merely a form and nothing more than a form. It does NOT set the rules for how much and when to report your income. The IRS does NOT have a minimum threshold for reporting income. However for self employment taxes is says to report above $400.
So with or without a 1099K you likely should be reporting your income. Keep in mind you still get to take all your expenses and costs away from the gross amount to arrive at your taxable income. The Schedule C does a great job at explaining what expenses are deductible.
If you have more questions, feel free to ask. I know taxes can be very frustrating. I personally use a Tax Program and that has served me and my family [including kids] well for many years.
The answer to your initial question was given in the post above yours from me, post # 9. Here is what I wrote.
But they do. Have you ever read the policy page? Many forget that Ebay has a policy for just about everything, we just need to look it up.
Keep in mind that Settle date = Payout date. Not the date you receive the money into your bank, but the date Ebay releases the Payout.
What's included in Form 1099-K
As Form 1099-K is an IRS information return, it includes the gross amount of all reportable payments within a calendar year, based on when funds settle to eBay, not necessarily when funds are received by sellers. This amount does not include any adjustments, for example, credits, discounts, fees, refunds, or any other adjustable amounts. This means that the gross amount on your Form 1099-K may not be the final reportable amount on your tax return. You should consult your tax advisor to determine how best to use the information on your Form 1099-K when filing your personal and/or business income tax return.
If there's an issue with any transaction on your Form 1099-K, you can contact us with the item number and any relevant information about the transaction.
Additionally, Form 1099-K does not include the sales tax when it is automatically collected and remitted by eBay.
https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794#
The simplest way to look at this is that the number represented on the 1099K is Gross Receipts. Which means it is just the total amount of money coming INTO your MP account. It is BEFORE any deductions for product, shipping, refunds, fees, etc.
Cancellations would never show up on the 1099K unless the buyer had initially paid and then you cancelled the transaction. Then it would be in your 1099K number, so you still need to deduct for the refund and non recoverable fees if any.
@rising-sun-photography wrote:@mam98031
Something has definitely changed between the 2022 and 2023 1099-K. I am comparing canceled transactions for both years in situations where the buyer paid and then requested cancelation. Not transactions where the buyer requested cancelation before paying. I took a random sampling of roughly 25 canceled transactions frome each year for 2022 and 2023 and tried to find the original transaction on the 1099-K details spreadsheet. For 2022 I was able to find a transaction for every canceled ordered. For 2023 none of the canceled orders had an associated original transaction that showed up on the 1099-K details.
I don't have any answer for you. It should have been the same in all years that the 1099K existed. The amount reported to IRS is the total $$ value that entered your MP account with the exception of Sales Tax.
