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How to Report Paypal Fees on Taxes When Paying Contractors?
Title: How to Report Paypal Fees on Taxes When Paying Contractors? 1 I run a small Etsy shop and recently hired a graphic designer as an independent contractor for some product designs. I paid them $1500 through Paypal, but Paypal took their fee so the designer only received around $1455. Now I'm confused about tax reporting - do I put the full $1500 on their 1099 and my Schedule C, or just the $1455 they actually received after Paypal's cut? This is my first time dealing with contractors and I want to make sure I'm doing everything right for the upcoming tax filing. I don't want to mess up either their taxes or mine!
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Indiana State Tax Refund: Approved 1/27 but No DD Date - Any Updates?
Filed and got approved for Indiana state refund on January 27th. Status shows approved but still no direct deposit date. Anyone else from Indiana get their refund yet or know typical timeline? Starting to get anxious since bills are piling up.
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Check ur bank account! Just got mine this morning and I was approved 1/26
omg checking rn! 🏃♀️
nothing yet but gives me hope! 😭
Employer stopped withholding federal taxes after buyout - is this even legal for 2024?
My wife's company got bought out by a bigger competitor at the end of last year, and something weird is happening with everyone's first paychecks of 2024. Nobody is having federal income taxes withheld from their paychecks! They're still taking out state taxes, Social Security, and Medicare, but there's zero federal withholding showing up. When several employees asked payroll about it, they were told it's part of the "new company's compensation philosophy" and something about maximizing take-home pay. The HR person mentioned something about employees being responsible for their own tax planning. I'm pretty concerned because my wife's previous withholding was around $320 per biweekly paycheck, and now that money is in her check but isn't being sent to the IRS. This seems like a disaster waiting to happen next April when taxes are due. We'll likely owe thousands that we haven't been setting aside. Can a company legally just decide not to withhold federal taxes? I thought employers were required by law to withhold federal income tax. Has anyone dealt with something like this before? Should we just start setting aside money ourselves or demand they fix their payroll system?
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Just adding another perspective - could they be confusing this with the Trump-era payroll tax deferral that happened during COVID? That was only for Social Security and was temporary, but I remember some companies misunderstood it. Or maybe they're thinking of the increased standard deduction? Either way, absolutely not legal to just stop withholding federal taxes!!! My sister works for a tax prep company and says they're already seeing people coming in with massive unexpected tax bills because of withholding mistakes. Don't wait on this!
I was thinking the same thing about possible confusion with COVID-era policies. My company temporarily messed up withholding in early 2022 thinking some of those policies were still in effect when they'd actually expired. Took them a month to fix it and everyone had to make catch-up withholding payments.
This is absolutely not legal and needs immediate attention! As others have mentioned, employers are required by federal law to withhold income taxes based on employee W-4 forms - there's no "compensation philosophy" exemption. I'd recommend your wife take a multi-pronged approach: 1) **Document everything** - Save copies of paystubs showing zero federal withholding and any communication from HR about this policy 2) **Submit a new W-4** - Even if the old one should transfer, get a fresh one on file immediately requesting proper withholding 3) **Calculate quarterly payments** - Start making estimated tax payments to avoid underpayment penalties. You can use IRS Form 1040-ES or the IRS online payment system 4) **Escalate beyond HR** - If payroll/HR won't fix this, consider contacting the Department of Labor or your state's labor department. They take employer tax compliance seriously The fact that this is affecting ALL employees makes it sound like a systematic error during the acquisition rather than individual W-4 issues. The new company may not realize they're violating federal tax law, but ignorance isn't a defense here. Don't let them brush this off - you're looking at potentially thousands in unexpected taxes plus penalties if this continues!
Indiana State Tax Refund Deposit Timeline - How Long After Approval?
Just got approved for my indiana state refund and wondering how long it usually takes to hit bank accounts? Anyone get theirs recently? Starting to get anxious checking my account every 5 mins lol
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anyone else notice indiana is way faster this year compared to last? used to take like 2 weeks minimum
facts! they finally got their act together 💯
Serve Card IRS Refund Direct Deposit Experiences and Wait Times?
Getting anxious about my refund. Filed and got accepted in January, chose direct deposit to my Serve card. Has anyone received their refund on Serve yet? Whats your timeline looking like?
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my sister got hers on serve in like 2 weeks but mine is taking forever idk why
did she file early? heard early filers get paid faster
yea she filed like first week of jan
Already got mine on serve card! Filed Jan 29, deposited Feb 13th. No issues at all tbh
lucky you! 🤡 im still refreshing wmr like a clown
@Dylan Cooper hang in there! I m'in the same boat - filed early February and still waiting on my Serve card deposit. The IRS is super backed up this year from what I ve'been reading. At least we know Serve works fine for refunds based on everyone else s'experiences here!
Christian Burns
7 Don't forget that the Paypal fees themselves are fully deductible business expenses! I've been running my consulting business for years and always make sure to track these separately. In your accounting software, you should record: - Full payment to contractor: $1500 (reported on 1099-NEC) - Paypal fee: $45 (deducted as a business expense) - Net cash outflow: $1545
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Christian Burns
Author18 Do you track the fees individually for each transaction or just do a lump sum at the end of the year? I've been trying to figure out the easiest way to handle this.
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Christian Burns
Author7 I track them individually for each transaction. Most accounting software can be set up to automatically split Paypal transactions into the payment amount and the fee amount. If you're using something like QuickBooks or Xero, you can create a bank rule that recognizes Paypal transactions and automatically splits them - the main amount goes to your contractor expense account and the fee portion goes to a "Payment Processing Fees" expense account. Makes tax time much easier when everything is already categorized properly.
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Liam O'Reilly
This is such helpful information! I'm just starting my freelance business and was completely confused about how to handle payment processor fees. I've been using Zelle and Venmo for some payments thinking it would be simpler, but now I realize I need to properly track everything for tax purposes. Quick question - if I paid a contractor $800 through Zelle (which doesn't charge fees), do I still need to issue a 1099-NEC? And should I switch to a payment method that gives better documentation for business expenses? I want to make sure I'm setting up good habits from the beginning rather than trying to fix things later!
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