I was recently told that I do not have to claim income on any shops for a company if it does not exceed 600.00. I was also informed that the reimbursement for items purchased in the shop does not need to be considered income either. Can you help?

OK well, first of all, you were told wrong. The $600 amount is before you will be issued a 1099 form which is a statement of income. But the IRS says that any money that you earn you will have to declare for income taxes You will have to pay the entire part for Social Security not only the part that you would normally pay but also the part that your employer would pay since you are working as an Independent Contractor. That will be 15% of what you make. The reimbursements are not taxed because they are paying you back for what you spent to do the shop. On a side note, you will have to keep really good records about what you spent because some times the companies will not separate the fee from the reimbursements they just lump them together.

Oh yeah if you question that go see a CPA you can write that off next year as a business expense.

James_15127781056247 @ Apr 19, 2020 5:25:42 PM

OK well, first of all, you were told wrong. The $600 amount is before you will be issued a 1099 form which is a statement of income. But the IRS says that any money that you earn you will have to declare for income taxes You will have to pay the entire part for Social Security not only the part that you would normally pay but also the part that your employer would pay since you are working as an Independent Contractor. That will be 15% of what you make. The reimbursements are not taxed because they are paying you back for what you spent to do the shop. On a side note, you will have to keep really good records about what you spent because some times the companies will not separate the fee from the reimbursements they just lump them together.

Oh yeah if you question that go see a CPA you can write that off next year as a business expense.

Thanks, I have always reported all payment in the past plus repayment for purchases. I have all my receipts. I was actually told that by a company I work for. They told me they do not report clients that earn less than 600.00.

Kevin_15027958065114 @ Apr 22, 2020 11:12:15 AM

James_15127781056247 @ Apr 19, 2020 5:25:42 PM

OK well, first of all, you were told wrong. The $600 amount is before you will be issued a 1099 form which is a statement of income. But the IRS says that any money that you earn you will have to declare for income taxes You will have to pay the entire part for Social Security not only the part that you would normally pay but also the part that your employer would pay since you are working as an Independent Contractor. That will be 15% of what you make. The reimbursements are not taxed because they are paying you back for what you spent to do the shop. On a side note, you will have to keep really good records about what you spent because some times the companies will not separate the fee from the reimbursements they just lump them together.

Oh yeah if you question that go see a CPA you can write that off next year as a business expense.

Thanks, I have always reported all payment in the past plus repayment for purchases. I have all my receipts. I was actually told that by a company I work for. They told me they do not report clients that earn less than 600.00.

Thank you so much for the clarification, you have simplified to where it was easy for me to comprehend.

That part about companies not reporting payments below $600 is true. They do not report the individual person. It is all lumped together in one large sum. Paid out $22,000 to 60 different subcontractors all less than $699 each.