1099-K Help

Vincent

Member
Jurisdiction
Illinois
I am on SSDI as well as Self Employed. I am asking this question because Social Security says they want the gross amount earned. That is what I am trying to figure out.

To my understanding as an Independent Contractor there is no Gross and Net like a W-2 Employee.

This all is filed just under my Social Security number and not any business EIN.

For the Self-Employment I am used to just getting a 1099-NEC.

This year a company that connects you with clients and charges a 11.5 set fee to do so for each work order is sending out a 1099-K instead.

These fees to my understanding are tax deductible which are all well and good.

If the Gross amount before the fees was for example $100, and the fees of 11.5 % or $11.50 is taken out, the remainder of course is $88.50.

So my question is what amount is being reported to Social Security as income? The $100 before the fees that are set to run their platform or the $88.50 of what I actually received?

The Company is FieldNation.com

I have attached an example work order to make it even more clear hopefully to what I am asking.


I am also placing in this thread a link to this companies description of the fee's and why they say they are taken out.

Support Central.

"
Field Nation Provider Service Fees
Sep 8, 2023•Knowledge
Summary
Payments for work orders completed through the Field Nation Marketplace are transacted through our payment processing system to ensure that service providers are paid in a timely and secure manner.


To cover the operating costs of facilitating the entirety of these transactions, we charge our fees on the FINAL PAYMENT AMOUNT of each work order that we process, which is deducted at the time of payment processing. Like other platforms that facilitate transactions between two parties, Field Nation charges a fee for the value we provide. Our software enables users to get work, manage that work, track deliverables and expenses, get paid, access reporting for tax purposes, and more. Because we provide value across all aspects of the work order, the Field Nation fee is assessed on the total value of each work order, including expenses.


The Field Nation fee for providers is calculated and deducted based on the entire suite of features that are utilized by each user:


All service providers are charged a standard/minimum 10% service fee on all work orders because Like other platforms that facilitate transactions between two parties, we charge a fee for the value we provide. Our software enables users to get work, manage that work, track deliverables and expenses, get paid, access reporting for tax purposes, and more. Because we provide value across all aspects of the work order, the Field Nation fee is assessed on the total value of each work order, including expenses.


If you have upgraded to Field Nation Pro the service fee is 13.9% on all work orders.

Field Nation requires service providers to have a minimum amount of General Liability Insurance coverage before they can access the marketplace. Service providers who do not upload their own General Liability COI are subject to an additional fee of 1.5% per work order for coverage through the Field Nation General Liability offering.

As an optional/additional layer of coverage, service providers can get Occupational Accident Insurance (OAI) through Field Nation for an additional 1% OR .5% fee on all work orders. If the buyer has their own OAI, providers are charged a 0.5% fee. If the buyer does not have their own OAI, the provider is charged a 1% fee.

Work orders in certain states may be subject to an additional tax on the Field Nation Service Fee. If you have additional questions on sales and use tax please review this page hosted by our tax compliance partner. "


Thank you!
 

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For federal income tax purposes, the $100 is your gross income from self-employment and the fee is a deduction from that. I suspect that SSA uses the same approach. But either way your net income from self-employment is what SSA really cares about. You can read about how SSA does that in federal regulation 20 CFR § 404.1575. What SSA gets from the IRS will be the Schedule SE which is the form used to compute self-employment tax, which is how self-employed people pay their FICA (Social Security and Medicare) taxes. Note the form starts with your net income from the self-employment. That's what's used determine your SE tax obligation. Thus, the net income from self-employment on IRS Schedule SE is like the gross wages you get on a W-2, which is the start for SSA in determining FICA tax for employees.
 
The easiest way to determine your net income is to use Schedule C which shows your gross revenue, your deductions (business expenses like that fee) and your net income.

You also have to be careful that your net income doesn't exceed the monthly limit required by SSDI (Social Security Disability Income).

Read about Substantial Gainful Activity (SGA) at:

Substantial Gainful Activity (ssa.gov)

Exceed SGA and you could lose your disability benefits.
 
For federal income tax purposes, the $100 is your gross income from self-employment and the fee is a deduction from that. I suspect that SSA uses the same approach. But either way your net income from self-employment is what SSA really cares about. You can read about how SSA does that in federal regulation 20 CFR § 404.1575. What SSA gets from the IRS will be the Schedule SE which is the form used to compute self-employment tax, which is how self-employed people pay their FICA (Social Security and Medicare) taxes. Note the form starts with your net income from the self-employment. That's what's used determine your SE tax obligation. Thus, the net income from self-employment on IRS Schedule SE is like the gross wages you get on a W-2, which is the start for SSA in determining FICA tax for employees.

Thank you!
 
The easiest way to determine your net income is to use Schedule C which shows your gross revenue, your deductions (business expenses like that fee) and your net income.

You also have to be careful that your net income doesn't exceed the monthly limit required by SSDI (Social Security Disability Income).

Read about Substantial Gainful Activity (SGA) at:

Substantial Gainful Activity (ssa.gov)

Exceed SGA and you could lose your disability benefits.

Thank you!
 
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