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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2835
Experience:  IRS licensed Enrolled Agent and tax instructor
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I am just the organizer of a convention and I have elected

Customer Question

I am just the organizer of a convention and I have elected to use PayPal to ease in the payment process. I was advised that I will receive a 1099K for the Payments that I have received. Do I need to file something with the IRS or what do I need to do?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

How much was deposited on your PayPal account?

Expert:  emc011075 replied 1 year ago.

If the payment was less than 20K, no 1099K will be issued. If you received any type of income for services provided (like organizing a convention), regardless if you get 1099K/1099Misc or not, you are required to report it on your tax return. You can offset the income with expenses you had.

Customer: replied 1 year ago.
According to the 1099K, roughly $91,000
Customer: replied 1 year ago.
I do not take ANY payment for organizing the convention...
Customer: replied 1 year ago.
The Money all goes to pay for the actual convention itself...and the convention newsletter...Zero Profit.
Expert:  emc011075 replied 1 year ago.

Ok. So what was deposited into your paypal account?

Expert:  emc011075 replied 1 year ago.

Where the money came from? From who?

Customer: replied 1 year ago.
Basically the Convention cost is put into the PayPal account (Which I am ONLY the organizer) and then transferred to the bank so that we can write a check for the convention.
Customer: replied 1 year ago.
The money comes from the convention participants...It is more like a reunion than a convention...
Expert:  emc011075 replied 1 year ago.

Ok, I see. If you didn't organize the convention, what did you organized?

Customer: replied 1 year ago.
I used PayPal for its accounting ability and so that I didnt have to process 500 checks via snail mail...I guess that I "Organized" the convention, but I get nothing personally from it...
Expert:  emc011075 replied 1 year ago.

Ok. If you organized a convention, regardless if you made any profit or not, and received contributions, the contributions are considered your income. You will report the income on schedule C and deduct your expenses to arrive at your net profit or loss. If you used all the money for convention expenses, you shouldn't have any profit but you will still have to claim the activity on your tax return.

Expert:  emc011075 replied 1 year ago.

PayPal is required to report accounts with deposits over 20K or with more than 200 deposit. With 500+ deposits IRS will be looking for some type of income on your tax return. You cannot ignore it.

Expert:  emc011075 replied 1 year ago.

Any questions? Is there anything else I can help you with today?

I know it is not the answer you were hopping for, but that's the easiest way to keep IRS of your back and avoid future complications. PayPal with send 1099K to IRS and IRS softwares will be looking for a match on your tax return, just like with W2s or other tax forms. If the amount is not reported on your tax return, you will receive a notice that more income was reported from third parties and your return had been recalculated. You will receive a bill and you will have two options. Agree with IRS and pay the bill or amend the return and fix it. If you report it correctly now, you can avoid future hassle with IRS.

Anyway if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.