EBAY 1099-K & Tax Filing Question

[exoticatropicals]

Just got my 1099-K in the mail from Ebay.

It's confusing.   There is a gross total on line 1a of "all payment transactions"

and then a breakdown of each month going from August 2020 to Dec 2020 (I started Managed Payment in Aug 2020)

Those months, added up, do match the gross total amount on line 1a..

However, the problem is- I'm not sure if that gross amount on line 1a includes: the sales tax ebay collected, and/or the "selling costs" that ebay takes (this includes ebay fees and shipping costs)

Now I was HOPING that I could use these reports to figure that out: 

https://www.ebay.com/sh/performance/sales 

However, when you go month by month, the totals shown in the reports do NOT match what Ebay is showing for each month on the 1099k.

So now I'm completely lost.

I need to know if the sales tax Ebay collected is IN the 1099-k gross amount for 2020 (line 1a) or not..

I also need to know if the "Selling fees" ebay deducted from my payments are IN the 1099-k gross amount for 2020 (line 1a) or not..

Anyone know for sure?

Or perhaps an Ebay representative can clue us in on this?  It's very important to know when filing our taxes.

[mam98031]

@nwtradepost 

1099K's from any site do NOT report Gross Income, the form reports Gross Receipts.  The two are not the same.  Which might be why you are having some issues in reconciliation.   Gross Receipts is the total amount of money coming into your account from buyers WITHOUT deductions for ANYTHING.  You must reconcile and subtract out refunds, cancellations etc.  

Something to keep in mind about Ebay's 1099K is that it is NOT based on transaction date but on settlement date.  So that will make a real difference when you are working with the numbers.

[mam98031]

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@nwtradepost wrote:

FORGOT TO MENTION! Both eBay and Amazon over reported to the IRS. They either underpaid me, and didnt show this in their own reports given to me, or they over-reported to the IRS.  My real concern is that if the numbers they reported to the IRS are higher then what they are showing me in my reports which are now in sync with their reports, then it seems they are not paying me for some sales but not reflecting this in any reports in which case they did not pay me what they are saying they are paying me. 

I suspect it is an issue with their accounting/reporting dating. Example, they close their books according to a timezone inconsistent with the timezone they generate the reports they give to me, resulting in some sales showing up the next day, which would lead to them showing up in the next month, which would lead to sales being reported on the 1-1-2021 instead of 12-31-2020. I know for fact this is the issue with Amazon, which is why I suspect it is the issue with eBay.

In my opinion, I think ALL reporting should be handled with Universal stamping so it remains consistent 100% of the time, but it does not appear that's what they are currently doing.

I knew Amazon was going to be off, since as I mentioned they "account" for sales whenever they feel like they should and not when they actually occur, or even on the day their reports say it occurred. I personally refuse to alter my perfect records of my earning to match there false reports, so will report the earnings in the way the Amazon SHOULD be reporting, and will do the same for eBay.

Like I said, all of the reports I keep for eBay, 100% match the reports I download from eBay. So there is no reason the same reports should not match the numbers eBay has reported the IRS. Only off by less then 1%, but still inaccurate and not consistent with their own reports.

HAPPY 2021!

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@nwtradepost 

You just misunderstand.  They aren't "over reporting"  They are reporting per the IRS requirements to report.

[nwtradepost]

This is exactly why I don't bother on here. You are misunderstanding me, I am fully understating what I am saying and what you are suggesting.  I live and breather these numbers, fees, takes, algorithms and equations. I am a software developer and work almost exclusively with this type of data, for many many years... The reports given to the IRS are wrong.  I can accurately prove if needed to the IRS that my numbers are accurate and done flawlessly down to the penny, on the actual days they should be accounted for, in according with common accounting practices. 

No matter how you slice the fees, taxes, refunds, return postage, selling fees, ad fees, add then dont add them, etc etc etc. I have been studying and monitoring all forms of reporting in all contexts from all the major marketplaces and payment providers for many, many years. I monitor and track all legacy and current API call methods, XML and JSON. Get and Post. Its not a guess, its not a suspicion, its a confirmation, the numbers reported to the IRS are slightly inaccurate, but even ever so slightly inaccurate equates to "in fact inaccurate, or not accurate or without accuracy".

If the mistake was as you say, my misunderstanding about what should and should not be included in report A or report B, then the numbers would be much much more off then less then 1%. Average return/refund rate is higher then that. Average sales tax collected by facilitator is much higher then that. Average fees per sale is much higher then that. MY MANUAL reports perfectly reconcile with everything eBay give to sellers in ANY possible way of obtaining it. MY MANUAL reports perfectly reconcile with Amazon ONLY after adjusting for the fact that their downloadable reports will account for the sale on the day you mark it as shipped on their market place, even if you fulfilled the order and "EARNED" the income on friday when you actually shipped the item and forgot to "mark as shipped" on amazon.  This is exactly why Amazon is the worst of the worst, and eBay was the BEST of.. well whatever we have to pick from when they were PayPal and eventually were partnered with PayPal. Paypals system is more complicated then any of the others since it has always had to be more flexible then the others, yet is can always be perfectly reconciles down the the PENNY (AS LONG AS YOU KNOW WHAT TO INCLUDE WHEN AND WHERE AND WHAT TO EXCLUDE WHEN AND WHERE, as I do)

Again, my number can be perfectly reconciles to EVERY single report/api/etc from eBay of all types from all  available points you can obtain them, and the numbers shown on the 1099-k are impossible to reproduce. Please don't forget, I fully understand when fees are included, when they are not included, when taxes are included, when taxes are not included, when refunds are included, when refunds are not included, etc etc.

I have already wasted to much time here. Believe what you want, this is the exact reason we are developing eCommerce tools, so you can SEE for yourself the errors in other peoples data. Been tracking for years, PayPal, NEVER a problem, Amazon, always a problem, eBay not a problem until the 1099-k's.

[nwtradepost]

HATE to do it, but I messed up. I meant that both Amazon and eBay have UNDER REPORTED my income but what appears to be just around a day or less worth of sales, which would be expected if they are accounting for some sales LATER then they should be. Whatever data they are using to report to the IRS, it appears some sales are most likely not being accounted for on Dec 31 2020 and where mistakenly accounted for on Jan 01 2021 (FOR CERTAIN THIS IS THE CASE WITH AMAZON, JUST DON'T HAVE ACCESS TO THE DATA SETS EBAY USES TO REPORT TO THE IRS), but all of eBays API's and downloadable reports reconcile to my manual entries perfectly. So something seem to be slightly off on eBays back end. I am just a dude, so I don't know. All I know is what I have stated. 

Hope this can help someone.

[mam98031]

For Ebay they are using the Settlement Date when accounting for the money coming into your MP account.  They are NOT using the transaction date.  I explained this earlier and it would be what it causing your issue in reconciling.  Right or wrong, it is what they are doing on 1099Ks.

[zephyr413]

I think you are right here and thank you for pointing the right direction.

I started using managed payments last August. So I have 1099 from paypal and ebay

With Paypal, I was able to match the numbers on 1099s exactly with the transaction record.

However, for managed payments, I could not match the numbers from the 1099s with the transactions I downloaded from eBay, though it's just a little off. And I also checked the monthly transactions with the numbers on 1099s, still no match. After reading your post, I realized it's exactly the problem. If I remove the three transactions on 12/31/2020 (I'm not sure what was the time of those three sales, as it's not included in the transaction report. Paypal does include transaction time in the report, by the way), I can match the numbers on 1099s with the transaction record.

[exoticatropicals]

Yeah this all sounds about right (ie: a mess LOL)

but to get to the root ofmy original post question..

On the  EBAY 1099k line 1a "Gross amount of payment transactions"

despite what some said back in earlier posts  (Mam9831 who was contradicting themselves on this question)

the STATE SALES TAX COLLECTED BY EBAY IS ****NOT***** INCLUDED ON LINE 1a of the 1099k.

Thus ebay's collected state sales tax should not be expensed on your taxes.

If anyone knows differently, please advise 🙂

Thank you!

[mam98031]

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@exoticatropicals wrote:

Yeah this all sounds about right (ie: a mess LOL)

but to get to the root ofmy original post question..

On the  EBAY 1099k line 1a "Gross amount of payment transactions"

despite what some said back in earlier posts  (Mam9831 who was contradicting themselves on this question)

the STATE SALES TAX COLLECTED BY EBAY IS ****NOT***** INCLUDED ON LINE 1a of the 1099k.

Thus ebay's collected state sales tax should not be expensed on your taxes.

If anyone knows differently, please advise 🙂

Thank you!

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This is a very old thread.  And while Ebay does not include the Sales tax on the 1099K's they release, be very careful as Paypal does.  Ebay is doing it differently, so be aware.

This stuff was resolved months ago as we are now in August.  Your a bit late returning.

[exoticatropicals]

 its called an extension and I'm right on time. Been filing them for years.  Due Sept 15th.

So again, to be clear: the sales tax is *NOT* included on line 1a of the Ebay 1099

For 2020, I will be deducting the sales tax Ebay took out of the Paypal 1099 for the first half of the year.  After that, it goes to the Ebay 1099, which does not include sales tax under GROSS(line 1 a)

.. so no deducting Sales Tax from an Ebay 1099.

Then, going forward,  I'll barely be using Paypal, so not really an issue anymore.

You mention it "was resolved months ago" 

..link?  Source?  Where was it resolved?    I would like to read up on it 🙂

[exoticatropicals · Accepted solution]

Followup:

"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

[cordell1]

The 1099 is gross money received.  You have to do your paperwork.  The 1099 does not account for refunds or other expenses.  Simple thing is to print your paperwork on each sale, on that sheet note your cost of goods, ebay fee, shipping cost.  At some point do your accounting ( I use quick books).  I enter Income, refunds,  expenses including mileage for buying inventory and taking package to post office.  When finished I push a button that gives me a report for the year of gross income minus expenses to arrive at net profit and that is the number you are taxed on.  Mileage really adds up to reduce that gross income.  It's not hard just takes a little time.

[mam98031]

Yes, for most this question was cleared up in January when most are preparing to file their taxes.  I am glad you found your own answers.

[worldwidepartsoutlet]

eBay, Amazon and PayPal 1099's all and I mean all of them report the total of  each the transactions per month on your 1099's to the IRS. What ever your customer pays on the invoice total is what gets added to your 1099's for the IRS 100%. We have been selling on line for 20 years. If in doubt simply call eBay they will confirm.

You are responsible for finding all taxes they collected on your behalf and then remitted to the states "Easy on Amazon they do it for you". You have to locate and total them all up then adding in you tax forms "marketplace tax collected" on your schedule C.

Their is multiple locations you can add this tax to decrease your tax burden as it was and is NOT income. Will simply be a deduction from the total of the 1099 that is all reported as income to the IRS.

Failure to do this will = you pay tax for the marketplace collected tax on your behalf as income by the IRS.

Why would you want to pay taxes for income you didn't receive. Is not too hard to isolate them on PP or eBay just have to know where to go. 

[worldwidepartsoutlet]

That is 100% incorrect. The sentence on that link "Additionally, Form 1099-K does not include the sales tax when it is automatically collected and remitted by eBay" is absolutely not correct and should be removed as is not correct statement. Have sent ebay 

[mam98031]

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@worldwidepartsoutlet wrote:

eBay, Amazon and PayPal 1099's all and I mean all of them report the total of  each the transactions per month on your 1099's to the IRS. What ever your customer pays on the invoice total is what gets added to your 1099's for the IRS 100%. We have been selling on line for 20 years. If in doubt simply call eBay they will confirm.

You are responsible for finding all taxes they collected on your behalf and then remitted to the states "Easy on Amazon they do it for you". You have to locate and total them all up then adding in you tax forms "marketplace tax collected" on your schedule C.

Their is multiple locations you can add this tax to decrease your tax burden as it was and is NOT income. Will simply be a deduction from the total of the 1099 that is all reported as income to the IRS.

Failure to do this will = you pay tax for the marketplace collected tax on your behalf as income by the IRS.

Why would you want to pay taxes for income you didn't receive. Is not too hard to isolate them on PP or eBay just have to know where to go. 

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@worldwidepartsoutlet 

Last year Ebay's 1099K was different than most of the other sites in that they did not include Sales tax paid by the buyer and they did not use the Transaction date but the Payout date as the date for the 1099K numbers.  The policy page has been changed and is silent on both those issues now, so it is uncertain as to what numbers they will use on the 1099K this year.  I have asked the questions of them and hopefully we actually get an answer but in my experience, most MP questions go unanswered.

Ebay also collects and remits sales tax to the appropriate states, they have been doing this since January of 2019 when the MFLs started passing in the various states.  Ebay sellers are NOT responsible to pay sales taxes to states, Ebay does that by law.

https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794