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I am concerned with the new paypal requirements for a 1099

that my wife and I...
I am concerned with the new paypal requirements for a 1099 that my wife and I will be responsible for a large amount of tax that isn't necessarily income. I am in Afghanistan and was asked to handle collection and and payment for a satellite service for our platoon. This totals to over $20,000 dollars though every dollar I have collected went to pay the internet service provider. Am I going to get stuck paying out of pocket for the taxes associated with this?
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Answered in 20 minutes by:
11/1/2011
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
Experience: Taxes, Immigration, Labor Relations
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Hi and welcome to Just Answer!
The form 1099-K is a new form and it has not be finalized yet - here is a draft - http://www.irs.gov/pub/irs-dft/f1099k--dft.pdf

That form is design to report payments - but the fact of reporting doesn't classify payments as taxable income.

The form 1099-K will be issued to you based on requirements in Regulations section 1.6050W-1.

Here are regulations - http://www.irs.gov/pub/irs-utl/td_9496_final_reg.pdf

Here are some additional information provided by the IRS - http://www.irs.gov/pub/irs-utl/irdm_section_6050w_faqs_7_23_11.pdf
You will need to provide explanation to the IRS about sources and purposes of these payments. But based on your information - that is not your taxable income - and you should not pay any tax on these amounts.

Please be sure to keep all records.

Please be aware that this is a new type of reporting - and most likely - there will be many changes.

 

Let me know if you need any help or clarification.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
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