Why your 1099k will not match your books.

[quadcitypickers]

I finally got my 1099 today and spent the next 2 hours pulling my hair out figuring out why nothing matches with my own books.

Apparently, if you get paid for something, that amount is not counted UNTIL it clears and is made available.

If you get paid $500 for something on December 30, 2020, and the amount isn't available in managed payments until January 2nd of 2021, it will STILL SHOW UP in the 1099K.

IF you sell something on December 30, 2021 and the buyer pays the same day, and the money doesn't get made available until next year (2022), it will NOT show up.

This ALSO means that payments made towards the end of one month do not show up in that month's box if they settle on next month. So no, none of the monthly boxes on the 1099-K will match the sum of subtotal and shipping on downloaded reports.

Since paypal didn't have a processing time like managed payments does, I have a feeling this is going to screw a lot of people up, and no where on the 1099 help page on the eBay site or the 1099-K itself does it say that transactions that settled after the calendar year will not be included.

[stainlessenginecovers]

I don't believe it's still on the 1099 when it's just 'available'; it shows when it shows 'deposited on 2/1/22 (example). 

[quadcitypickers]

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@stainlessenginecovers wrote:

I don't believe it's still on the 1099 when it's just 'available'; it shows when it shows 'deposited on 2/1/22 (example). 

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You had me scared for a second so I checked, no, looking at the 1099-k detailed report and the orders, the "settlement" dates match the available date in payouts.

[glasser]

Not a tax expert so not giving advice here

You need check with a tax preparer for sales that occur toward the end of the year but could possibly report for the following year. In some methods of accounting, you might book the income at the time of sale/payment of at least count the sale as a receivable until paid. Companies usually have receivables--items they have sold but have to be paid for--think of a bill you get in the mail that you need to pay. The company billing is creating a receivable until you pay. You tax preparer should eb able to easily answer the question of how to handle payments and income reporting for your tax forms.

[quadcitypickers]

Most small businesses including myself use cash based accounting.

The issue is what legally defines (in the eyes of the IRS) a payment through managed payments.

There is 4 steps, processing, available, funds sent, and funds appearing in my checking account.

[shellistoys]

I asked this on another post, and the answers made sense. The amount on the 1099-K is the amount that the buyer paid ebay, NOT the amount that ebay paid you. Ebay is acting as the payment processor (just like if you used Visa, Mastercard, Square, etc.) The amount reported as income is the full amount the buyer paid you. I'm not an accountant, but on the Schedule C there are multiple places where one can deduct business expenses, including payment processing fees.

[caldreamer]

1099 includes total amount collected from customer (purchase price + shipping).   When you are deducting business expenses you include "shipping amount" (actual amount that  you spent printing the shipping label) etc.

[stainlessenginecovers]

@quadcitypickers 

That's not correct:

1st- there is no 'settlement' date shown on the 'Payments' tab so even though ebay loves using that term, let's use the terms that are actually shown on the Payments tab. 

It shows 3 things (not counting hold)

1.) Processing (is always the date the sale was made on ebay and is NOT on the your 1099)

2.) Available (this means processing is complete and the money is 'ready' (but not done yet) to 'Payout' (deposit)

3.) 'Payout of $XX was done on Feb 2, 2022 (example). 

That amount that is used on the 1099 is the date shown in #3 above. NOT on the 'Available' date

which is A.) Not dated and B.) Not yet 'paid out (deposited)

Also note on the Payments Tab REPORTS, when you run them, monthly, annual, (doesn't matter) they show a 'transaction date' and that IS the date that the sale was made on eBay. They do NOT show any other dates and typically, the actual 'Payout' is done 2-3 days later. 

So, a sale done on Dec 31 will show, on that report, Dec 31; but the Payout was done on 1/3/22 so that Sale will NOT SHOW on the 1099.

This DOES make every report, month to month, all WRONG compared to the 1099. Overall, they should wash into the next month, so January and December will be the 2 months where those numbers will NEVER match. 

[bombaysalesco]

This was my perspective as well. you have to calculate your base cost of the product, and then try to calculate all the excess expenses and itemize those on the side to make sure that they are deducted from your total payout. Then you’re left with the amount that is taxed

[quadcitypickers]

I really wish eBay would not have gotten rid of PayPal.

It would be nice if they at least had an instant transfer option, I'd even pay a small fee for it.

Accounting was so much easier because as long as there wasn't some random hold, the money was instantly available and thus much easier to account for.

[shoprosella]

My 1099k has a $53.44 positive difference from my figures.  While pulling reports and comparing them against my invoices I noticed a few times EBay pulled money from my bank account.  These were small amounts.  On the reports it showed these small amounts as gross amount recieved and were added to my gross sales. 

I have no clue how to report these amounts since the money pulled was from my ebay checking account and those amounts were already counted.  I deleted those amounts from my excel report and now I have a 53.44 difference on the 1099k.  Any ideas?

I already reported to the state board of equalization my figures for sales tax. But now there is a difference with the 1099k

[einickie]

You can see which transactions matchup with your 1099-K by downloading the “Detailed report” under Account—-Reports—-1099-K. This will give you a nice Excell spreadsheet of all transactions that Ebay is including in your taxable income for the year. 

[99gsturbo]

My problem with this is when I view detailed reports it shows 7 items sold. On my 1099k it shows 9 items sold. None of my items were cancelled or returned, so im not sure where the difference is coming from

[dbfolks166mt]

     This mismatch used to give me a few headaches every year since I had to reconcile what was on the 1099 against what I reported on my schedule C which differed. I use accrual accounting on my schedule C when filing my taxes and eBay uses either cash accounting or some hybrid when doing the 1099. I have gotten to the point, for a number of reasons, where I simply shutdown and quit selling around mid November. Started doing this after the shipping fiasco in 2020 caused by the pandemic but also because I have gotten to the point where I prefer to enjoy the holidays. For 2021 and 2022 the 1099 has matched my records to the penny. 

     For those using cash accounting on their schedule C the 1099 should match your own records. As for figuring out your expenses that is another mess if you are using cash accounting.