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Charles Markham
Charles Markham, EA, MST, USTCP
Category: Tax
Satisfied Customers: 769
Experience:  IRS Enrolled Agent, US Tax Court Practitioner
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This question is for an accountant.I run a website that

Resolved Question:

This question is for an accountant. I run a website that accepts funds from members that want to help other members and we take a transaction fee. Should I be collecting a 1099 from the receipient and give the donor(s) a 1099 each time they fund a project or person (receipient) most of the times the amout is $10 or $20 times 20 donors to fund one project or person so it can be an accounting nightmare for us. is there a better way?
Submitted: 5 years ago.
Category: Tax
Expert:  Charles Markham replied 5 years ago.

TaxWhisperer :

Well, fortunately for you the dollar limit for 1099s is $600. You do not have to issue them if the recipient receives less than $600. Do you want to discuss what would happen if somebody received more than $600.

Customer: Yes because I am trying to give the donors some kind of tax deductible break to persuade them to donate on our site and help someone in need.
TaxWhisperer :

In order to give the donors a tax deduction you must be a recognized charity by the IRS, a 501(c)(3).

Customer: I don't want to go that route, can't they 1099 me Instead and deduct the amount as a business expense?
TaxWhisperer :

Oh, I see, sure they can, but once again, there's no reason for them to 1099 you if their payment is under $600.

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