Question about IRS 1099-K tax form.

Asked 11 months ago - Silver Spring, MD

Basically PayPal sends 1099-k form for high volume sellers on eBay who has more than 20k $ in sales. I sells on eBay but my money goes to another PayPal account which is my cousin's account. His name is on the PayPal account and he will get IRS 1099-k under his name and social security number. But, its my own online business and I personally run it but basically our PayPal account is under his name.

My question is: Can I at the time of reporting taxes on Jan or March report that, those amount of money under my cousin name on 1099-k form is mine and I will pay taxes myself and don't consider it his income. Or can I say he is my employee?

Attorney answers (4)

  1. Bruce Givner

    Contributor Level 19

    8

    Lawyers agree

    Answered . Yes you can report that the 1099 income is yours if it is truly yours. However, the IRS is going to send out a notice when your cousin does not report all of the income reflected on his 1099. Therefore you should (i) work with a competent tax return preparer for both your return and your cousin's and (ii) clean up with PayPal accounts so that this does not occur in the future.

  2. Scott R. Scherr

    Contributor Level 18

    5

    Lawyers agree

    Answered . Consult with your accountant about these issues.

    This answer is being given for general informational purposes only and is not protected by the attorney-client... more
  3. Robb Adam Longman

    Pro

    Contributor Level 13

    3

    Lawyers agree

    Answered . Since the income is your's you are required to report it. However, even if you report the income, your cousin will still have issues because Paypal will also notify the IRS of his income; so both of you need to file to ensure proper reporting.

    Please note the information in this email does not constitute legal advice and is solely based upon general information questioned.

  4. E. Martin Davidoff

    Pro

    Contributor Level 15

    4

    Lawyers agree

    Answered . I agree with Mr. Givner. Your cousin can avoid a IRS notice by reporting the income and then reporting the portion of the income that is yours. Your cousin would issue a form 1099 of some sort to you.

    Going forward, get this all in the name of the proper entity conducting the business.

    Marty Davidoff, emd@taxattorneycpa.com, 732-274-1600. This answer is provided for general information only. You... more

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