# Payment Processers



## LADryver (Jun 6, 2017)

I know one other company besides Uber that handles their tax reporting in an unusual way. The other company uses a payment provider such as PayPal to make their payments for them, then tells their independent contractors (all now subject to AB5 in California incidentally) that they will get 1099k forms from PayPal because PayPal processes those payments. On the other hand I have worked with many companies who also send their payments through PayPal who properly furnish 1099 forms.

AB5 is probably going to be the cutting stone to these incorrect methods. Somehow it will come up. Penalties will be assessed, although fewer to the Uber company for issuing some form of 1099 to some of the recipients. The other incorrect company is going to be choked by the penalties assessed after years of not complying with 1099 requirements year after year to thousands of IC's. They could negotiate of course, but it will be a forced issue. Payroll is something they can not get around. But some do try harder than others.

Lawyers and accountants are wrong when they are wrong, and in some areas they can be wrong en masse, each wrong one following other wrong ones.

If you do not get a 1099 from Uber, add up your payment statements and report the income. The IRS will follow Uber's error to your own if you do not.


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## Dekero (Sep 24, 2019)

Skrew the IRS, they best have my refund check when I write off all these damn miles....


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## LADryver (Jun 6, 2017)

Dekero said:


> Skrew the IRS, they best have my refund check when I write off all these damn miles....


I hope you will have a good refund.


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## percy_ardmore (Jun 4, 2019)

If rideshare is your only income, you won't be getting a refund, no taxes were withheld. You just won't owe anything.


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## Dekero (Sep 24, 2019)

percy_ardmore said:


> If rideshare is your only income, you won't be getting a refund, no taxes were withheld. You just won't owe anything.


Wife works and pays taxes on 80k. I will be getting a refund... And Hawaii is in my near future... Thank you Rideshare milage write-off I shall enjoy a drink on the beach in your honor...


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## LADryver (Jun 6, 2017)

Dekero said:


> Wife works and pays taxes on 80k. I will be getting a refund... And Hawaii is in my near future... Thank you Rideshare milage write-off I shall enjoy a drink on the beach in your honor...


Enjoy it. Then when you come home, preserve it, by turning a profit. It will most likely be coming that IRS will form a department just for Uber Tax Returns. You have to intend to make money, even with the mileage rates. I used to "read" the IRS pretty well when I worked for them. So I'm just saying, they won't stand for it in the long term. They are now learning about the under-reporting by the 1099k usage.

From Forbes today:


> Even in states like Massachusetts and New Jersey that already have the equivalent of AB5, the companies have been fighting any lawsuits which could warrant individual arbitration," he continued. "They have been claiming they're not a transportation company, that they're just a platform that connects drivers and passengers; they've gone even further, saying they're just a third-party payment system, but their fee is [usually] 10 times what that kind of service takes."


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## Launchpad McQuack (Jan 8, 2019)

The way I understand it (and I am not an expert), using a payment processor does not absolve you of the responsibility of filing a 1099-MISC. If you pay a contractor over $600, you have to file a 1099-MISC regardless of whether you paid the contractor directly or whether you had a third party (Paypal, in your example) process the payment. The third party (Paypal) is required to file a 1099-K if they process more than $20,000 in payments on your behalf.

So lets say you work as an independent contractor and the company that you worked for pays you $15,000 for your services, processed through Paypal. You should still receive a 1099-MISC for $15,000 from the company that you worked for.

Now lets say that they paid you $25,000. You should receive a 1099-MISC for $25,000 from the company that you worked for and you should also receive a 1099-K from Paypal because they processed more than $20,000 on your behalf.

Now lets go back to the $15,000 case. Lets say that you also did work for a completely different company as an independent contractor, and they paid you $12,000 for your services and also processed the payment through Paypal. Now you should get 3 1099s. A 1099-MISC from Company A for $15,000, a 1099-MISC from Company B for $12,000, and a 1099-K from Paypal for $27,000.

That is how I understand it. If I am wrong, somebody please feel free to point it out.


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## LADryver (Jun 6, 2017)

Launchpad McQuack said:


> The way I understand it (and I am not an expert), using a payment processor does not absolve you of the responsibility of filing a 1099-MISC. If you pay a contractor over $600, you have to file a 1099-MISC regardless of whether you paid the contractor directly or whether you had a third party (Paypal, in your example) process the payment. The third party (Paypal) is required to file a 1099-K if they process more than $20,000 in payments on your behalf.
> 
> So lets say you work as an independent contractor and the company that you worked for pays you $15,000 for your services, processed through Paypal. You should still receive a 1099-MISC for $15,000 from the company that you worked for.
> 
> ...


You are trying hard to understand it and the only thing in your disadvantage is an inexperience in finance as an industry. Let me try to explain your question of PayPal as an example. A payment processer is one who takes the payment from the purchasers or clients and then pulls those funds by clearing houses to enable your own receiving of them. Hence, payments, and processing. They have nominal fees for this as an individual transaction but on the whole it adds up to a lot of money. PayPal was and mostly is a payment processor for people selling on eBay. When these sellers sell 20k or more, then in order for this Revenue to be known by the IRS, the 1099k requirement was born. It forces the seller to report the income, and show IRS how much of it is taxable. Otherwise, a lot of tax evasion is a going-on by those who think IRS won't figure them out. With 1099k, the IRS closed that information loophole. If course it was legislated by Congress, but is Administered and enforced by the IRS.

As drivers, if Uber was really our payment processer, it is difficult to go into the whole approved, active, deactivated, quality scores, rewards incentive, and boosts and surges and all of that. A payment processer can not tell you how you drive, can not give a diddly about how you drive, or how many rides you take. But, they apparently want to be Lord of all things...just not employers.

In street terms, everyone who makes $600 or more with Uber should get a 1099. Just not a 1099k at $20,000. But, whether you get one or the other you have to report what you know is right. Believe me, when the IRS begins a crusade, you become compelled to answer for it.


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## Seamus (Jun 21, 2018)

Launchpad McQuack said:


> The way I understand it (and I am not an expert), using a payment processor does not absolve you of the responsibility of filing a 1099-MISC. If you pay a contractor over $600, you have to file a 1099-MISC regardless of whether you paid the contractor directly or whether you had a third party (Paypal, in your example) process the payment. The third party (Paypal) is required to file a 1099-K if they process more than $20,000 in payments on your behalf.
> 
> So lets say you work as an independent contractor and the company that you worked for pays you $15,000 for your services, processed through Paypal. You should still receive a 1099-MISC for $15,000 from the company that you worked for.
> 
> ...


Sorry, yes you are wrong. Many internet app companies like U/L, Airbnb, etc all consider themselves payment processors. They consider that they are processing the TOTAL amount the pax pays for your ride minus the fees they withhold. Therefore, you get a 1099*k *for the total revenue the rider paid Uber on "your behalf" if over 20 thousand. THIS IS FOR RIDSHARE MONEY

For example, if pax paid Uber $25 thousand on your rides and Uber kept $8 k and paid you $17k you are going to get a 1099k for $25k. You will then write off their 8k fees on your schedule C.

If you get non ride payments from Uber such as bonuses etc.etc. Over $600 you will receive a separate 1099misc.

If you make under $600 in non rideshare income you will not get a 1099 misc. if you make under $20k in rideshare income (gross including what fees they withhold) you will not get a 1099k. If you do not receive a 1099k you will get an "income summary" with your tax information.



LADryver said:


> You are trying hard to understand it and the only thing in your disadvantage is an inexperience in finance as an industry. Let me try to explain your question of PayPal as an example. A payment processer is one who takes the payment from the purchasers or clients and then pulls those funds by clearing houses to enable your own receiving of them. Hence, payments, and processing. They have nominal fees for this as an individual transaction but on the whole it adds up to a lot of money. PayPal was and mostly is a payment processor for people selling on eBay. When these sellers sell 20k or more, then in order for this Revenue to be known by the IRS, the 1099k requirement was born. It forces the seller to report the income, and show IRS how much of it is taxable. Otherwise, a lot of tax evasion is a going-on by those who think IRS won't figure them out. With 1099k, the IRS closed that information loophole. If course it was legislated by Congress, but is Administered and enforced by the IRS.
> 
> As drivers, if Uber was really our payment processer, it is difficult to go into the whole approved, active, deactivated, quality scores, rewards incentive, and boosts and surges and all of that. A payment processer can not tell you how you drive, can not give a diddly about how you drive, or how many rides you take. But, they apparently want to be Lord of all things...just not employers.
> 
> In street terms, everyone who makes $600 or more with Uber should get a 1099. Just not a 1099k at $20,000. But, whether you get one or the other you have to report what you know is right. Believe me, when the IRS begins a crusade, you become compelled to answer for it.


Uber, Lyft, Airbnb, etc have been payment processors since their inception like it or not. Shouldn't doesn't mean anything they are wether we like it or not. The IRS approves this. They are the only ones that can change the classification


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## LADryver (Jun 6, 2017)

Seamus said:


> Sorry, yes you are wrong. Many internet app companies like U/L, Airbnb, etc all consider themselves payment processors. They consider that they are processing the TOTAL amount the pax pays for your ride minus the fees they withhold. Therefore, you get a 1099*k *for the total revenue the rider paid Uber on "your behalf" if over 20 thousand. THIS IS FOR RIDSHARE MONEY
> 
> For example, if pax paid Uber $25 thousand on your rides and Uber kept $8 k and paid you $17k you are going to get a 1099k for $25k. You will then write off their 8k fees on your schedule C.
> 
> ...


What will come out in the wash, is that they CALL themselves that. They avoid their roles, however Airbnb may be an exception because they do process payments. If they go beyond the scope of that, then they are misrepresenting their activities.


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## Seamus (Jun 21, 2018)

LADryver said:


> What will come out in the wash, is that they CALL themselves that. They avoid their roles, however Airbnb may be an exception because they do process payments. If they go beyond the scope of that, then they are misrepresenting their activities.


Look, U/L are trash companies. I don't know what will "come out in the wash" as the IRS has let them do this for 10 years. You and I both know it's a scam but apparently it's a legal scam.


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## Stevie The magic Unicorn (Apr 3, 2018)

In very very few situations will any of the payment processor contracts change in any way shape or form.

When I owned my own taxi i wrote off the % Square took as a business expense, they sent me a 1099 as a payment processor.

That did not in any way make me anything remotely close to an employee of square and to pretend otherwise would be laughable.

I'm laughing at the concept of square having to consider me as an employee for the years I owned my own cab.

Most of the people using these payment processors do so to have a way to accept credit cards for their business, nothing more.










This is probably more representative of the square user base than _anything_ else.

I still have a square account, (i reactivated here recently). I'm probobly not going to hit the threshold for the 1099 but i'm still going to report that income.

Square is awesome to have as a backup for credit card processing and works well enough for a primary system.


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## Launchpad McQuack (Jan 8, 2019)

Stevie The magic Unicorn said:


> When I owned my own taxi i wrote off the % Square took as a business expense, they sent me a 1099 as a payment processor.
> 
> That did not in any way make me anything remotely close to an employee of square and to pretend otherwise would be laughable.


The difference is that Square actually _is_ a payment processor. You were operating your business, and Square was simply providing a means to transfer money from your customers to you. That is not what Uber is doing. Uber is a taxi logistics company that is trying (successfully for many years) to claim that they are just processing payments.


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## MasterAbsher (Oct 16, 2019)

I have a real business besides Uber. The IRS had a new ruling a couple years or so ago that if you make $600 or more you will get a 1099. Square, PayPal and others, including Uber have to do this. This is the way the IRS makes sure they arent being cheated.


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## UberTaxPro (Oct 3, 2014)

MasterAbsher said:


> I have a real business besides Uber. The IRS had a new ruling a couple years or so ago that if you make $600 or more you will get a 1099. Square, PayPal and others, including Uber have to do this. This is the way the IRS makes sure they arent being cheated.


You're talking about 1099M. There are many types of 1099's each with its own rules. Uber issues 1099M's for other than driving income like payments for recruiting new drivers, sign up bonuses etc...
For driving income Uber issues 1099K's. 1099K's have different rules. The 1099k must be filed if you have at least 200 transactions and at least $20,000 in sales during the year that are processed by third-party payment processors such as PayPal and Google Checkout. This form is also issued as by credit card payment processors.
Whether or not Uber is correct in calling itself just a payment processor is debatable.

Different types of 1099's:

1099-A, _Acquisition or Abandonment of Secured Property_
1099-B, _Proceeds From Broker and Barter Exchange Transactions_
1099-C, _Cancellation of Debt_
1099-CAP, _Changes in Corporate Control and Capital Structure_
1099-DIV, _Dividends and Distributions_
1099-G, _Certain Government Payments_
1099-H, _Health Coverage Tax Credit (HCTC) Advance Payments_
1099-INT, _Interest Income_
1099-K, _Merchant Card and Third Party Network Payments_
1099-LTC, _Long-Term Care and Accelerated Death Benefits_
1099-MISC, _Miscellaneous Income_
1099-OID, _Original Issue Discount_
1099-PATR, _Taxable Distributions Received From Cooperatives_


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## oldfart (Dec 22, 2017)

LADryver said:


> I know one other company besides Uber that handles their tax reporting in an unusual way. The other company uses a payment provider such as PayPal to make their payments for them, then tells their independent contractors (all now subject to AB5 in California incidentally) that they will get 1099k forms from PayPal because PayPal processes those payments. On the other hand I have worked with many companies who also send their payments through PayPal who properly furnish 1099 forms.
> 
> AB5 is probably going to be the cutting stone to these incorrect methods. Somehow it will come up. Penalties will be assessed, although fewer to the Uber company for issuing some form of 1099 to some of the recipients. The other incorrect company is going to be choked by the penalties assessed after years of not complying with 1099 requirements year after year to thousands of IC's. They could negotiate of course, but it will be a forced issue. Payroll is something they can not get around. But some do try harder than others.
> 
> ...


In my last business I ran most of my payments through PayPal. And you are correct Uber issues 1099s the same way PayPal does. Ie less than $20000 does not generate a 1099

Where you are wrong is saying that they are doing something wrong. They aren't. They are following the irs rules correctly.

You are right of course, with your advise to keep good records because , 1099 or not, we must declare all our income


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## LADryver (Jun 6, 2017)

oldfart said:


> In my last business I ran most of my payments through PayPal. And you are correct Uber issues 1099s the same way PayPal does. Ie less than $20000 does not generate a 1099
> 
> Where you are wrong is saying that they are doing something wrong. They aren't. They are following the irs rules correctly.
> 
> You are right of course, with your advise to keep good records because , 1099 or not, we must declare all our income


They are correct if they really are a payment processor. But they are not.


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## tohunt4me (Nov 23, 2015)

percy_ardmore said:


> If rideshare is your only income, you won't be getting a refund, no taxes were withheld. You just won't owe anything.


Wrong.
I got a refund.
No taxes paid.


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## Dekero (Sep 24, 2019)

tohunt4me said:


> Wrong.
> I got a refund.
> No taxes paid.


As did I and lined up to get a fat check this year as well... Already booked for Hawaii in August on Uber... Thanx Dara


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## oldfart (Dec 22, 2017)

LADryver said:


> They are correct if they really are a payment processor. But they are not.


Oh but they are, as long as we are ICs But it makes no difference to the tax man. Either way we have to file a tax return for the money we make


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## LADryver (Jun 6, 2017)

oldfart said:


> Oh but they are, as long as we are ICs But it makes no difference to the tax man. Either way we have to file a tax return for the money we make


We are IC's, not Merchants. Payment Processers process payments for a fee, and is not "partner", "supplier", quaisi-employer, etc. A payment processor only processes payments. You misunderstood what an IC is. I have been an IC for many companies, and many years. An IC is a member of staff, and the payee for a payment processor is a client.


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## oldfart (Dec 22, 2017)

LADryver said:


> We are IC's, not Merchants. Payment Processers process payments for a fee, and is not "partner", "supplier", quaisi-employer, etc. A payment processor only processes payments. You misunderstood what an IC is. I have been an IC for many companies, and many years. An IC is a member of staff, and the payee for a payment processor is a client.


I understand perfectly well. I'm not so sure you do. We are merchants. We buy leads from Uber and we pay them to process payments. The also have a business relationship with the passengers

In the past I owned and operated a vacation rental business. My clients paid me to arrange for reservations at a vacation resort. I paid for the reservation and then sent my customer an invoice. I used PayPal to send the invoice and to process Credit card payments. My customer could click on a link and pay with a credit card. The payment, less pay pals fee went into my PayPal account. If I ran 200 transactions totaling at least $20000 in a year pay pal generated a 1099k

Uber works the same way. Now I own and operate a "vehicle for hire" business. I use Uber to find me customers and to handle their payments to me. Uber collects the money, takes their fees and puts my share in my account If I have over 200 transactions in a year totaling at least $20000, Uber generates a 1099k

Same-O... Same-O


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## LADryver (Jun 6, 2017)

oldfart said:


> I understand perfectly well. I'm not so sure you do. We are merchants. We buy leads from Uber and we pay them to process payments. The also have a business relationship with the passengers
> 
> In the past I owned and operated a vacation rental business. My clients paid me to arrange for reservations at a vacation resort. I paid for the reservation and then sent my customer an invoice. I used PayPal to send the invoice and to process Credit card payments. My customer could click on a link and pay with a credit card. The payment, less pay pals fee went into my PayPal account. If I ran 200 transactions totaling at least $20000 in a year pay pal generated a 1099k
> 
> ...


Are you kidding me? We get penalized when we fail to "purchase" those leads? Get away from the kool-aid. I know about vacation rentals. We are not travel suppliers or travel agents unless we happen to be affiliated somehow on our own without driving anything. You are confusing your industries. What permits us to have a car for hire business is the auspices of Uber. Otherwise we would be dealing directly with government for TCP licensing. If you are Uber Black you have a different paradigm. Uber everything else does not have TCP licensing. Besides, It is not a car rental. It is our car. We are the drivers. Nobody gets to take over my car.


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## oldfart (Dec 22, 2017)

LADryver said:


> Are you kidding me? We get penalized when we fail to "purchase" those leads? Get away from the kool-aid. I know about vacation rentals. We are not travel suppliers or travel agents unless we happen to be affiliated somehow on our own without driving anything. You are confusing your industries. What permits us to have a car for hire business is the auspices of Uber. Otherwise we would be dealing directly with government for TCP licensing. If you are Uber Black you have a different paradigm. Uber everything else does not have TCP licensing. Besides, It is not a car rental. It is our car. We are the drivers. Nobody gets to take over my car.


No I'm not a Uber "black"driver, although I do have a "vehicle for hire" permit from my county. And I accept credit cards for the pre scheduled rides I do and I use PayPal to process those payments from Uber

(Would you post a link to the agreement you have with Uber. clearly you have negotiated something different with them than the agreement I work under. What I'm trying to say here is that PayPal handles those payments in the same way that Uber handles payments from my Uber customers and both comply with the IRS rules for payment processors

I think that you fail to understand that we are not sub contractors. We we are independent contractors. and we are ubers customers. We buy leads and payment processing from them. And the passengers are our customers

You may not like those relationships and perhaps they are illegal but they are, in fact, defined, as I have described, by the agreements that we have signed.

I recently talked to the owner of one of the cab companies that service the airport here in Ft Myers. I asked whether his drivers are employees or independent contractor. They line up in an actual physical queue and they take rides in turn (first in, is first out, just like us) they do not get to reject the short rides or the long rides, or the folks with lots of baggage or any passenger. And they don't know where they are going until the passenger tells them They have to wear ties, white dress shirts, black pants and shoes, (vest and/or jackets are optional). They pick up at the airport, drop their passengers and immediately return to the airport The flat rate fares are split 50/50, with the company. The company supplies the car and insurance, and the driver pays for gas and keeps the car clean. These drivers work one day from the first incoming flight in the morning to the last one at night (roughly 20 hours) and they are off the next say They do not take the cars home, they pick them up at the taxi lot in the am and return them, full of gas and clean, at night

As I said these drivers, as much as they sound like employees to me, are independent contractors, just like us

I understand that California has defined the criteria a company has to meet to use independent contractors rather than employees and Uber will probably have to comply. I believe they will comply by rewriting the Uber/Driver agreement to make it clear that we are independent contractors. I don't believe Uber will ever pay us as employees


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## L DaVinci (Oct 26, 2019)

Dekero said:


> Skrew the IRS, they best have my refund check when I write off all these damn miles....


Your money is going to Trumps prison canteen fund.


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## KD_LA (Aug 16, 2017)

UberTaxPro said:


> You're talking about 1099M. There are many types of 1099's each with its own rules. Uber issues 1099M's for other than driving income like payments for recruiting new drivers, sign up bonuses etc...
> For driving income Uber issues 1099K's. 1099K's have different rules. The 1099k must be filed if you have at least 200 transactions and at least $20,000 in sales during the year that are processed by third-party payment processors such as PayPal and Google Checkout. This form is also issued as by credit card payment processors.
> Whether or not Uber is correct in calling itself just a payment processor is debatable.
> 
> ...


One more type: 1099-FU, issued by Uber to remind us how well they screw us!


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## LADryver (Jun 6, 2017)

oldfart said:


> No I'm not a Uber "black"driver, although I do have a "vehicle for hire" permit from my county. And I accept credit cards for the pre scheduled rides I do and I use PayPal to process those payments from Uber
> 
> (Would you post a link to the agreement you have with Uber. clearly you have negotiated something different with them than the agreement I work under. What I'm trying to say here is that PayPal handles those payments in the same way that Uber handles payments from my Uber customers and both comply with the IRS rules for payment processors
> 
> ...


Your business activity is not my business activity. Uber operates as numerous LLC's in numerous regions. My information is correct for my business relationship with Uber. Yours seems much different. That said, you do misunderstand what the difference between sub-contractor is and an independent contractor is. Before you get all arrogant to me, I am heavily experienced in business.


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## Seamus (Jun 21, 2018)

I think most of us realize Uber and Lyft are scamming the "Payment Processor" classification @LADryver as they are clearly much more. However, be that as it may the IRS has let them get away with it for 10 years now so for the moment it is a "legal scam". Ironically there are many drivers that like the $20k threshold of 1099k because they recklessly don't report their income if they didn't get a 1099k. Some day that could very well come back to bite them in the arse. It is silly not to claim the income because with proper record keeping the tax is minimal and not worth the penalty of getting discovered down the road. Taxable Income is about 0-10% of the gross. If Uber ever gets audited their would be many drivers crapping their pants.


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## oldfart (Dec 22, 2017)

LADryver said:


> Your business activity is not my business activity. Uber operates as numerous LLC's in numerous regions. My information is correct for my business relationship with Uber. Yours seems much different. That said, you do misunderstand what the difference between sub-contractor is and an independent contractor is. Before you get all arrogant to me, I am heavily experienced in business.


I think we have gotten away from the subject of your original post. As I said above. I agree with the advice you gave in that post, which as I understood it was this. 'Whether we get a 1099 or not, we need to file an accurate tax return' Not getting a 1099 is not an excuse for filling an incomplete tax return

I don't know why my understanding or misunderstanding of what an independent contractor or sub-contractor is, has any connection to how Uber (and PayPal) reports the payments they handle.

I'm almost positive that we both work under the same agreement with Uber All subcontractors are independent contractors, but not all independent contractors are sub contractors

We are both independent contractors doing work for our passengers and getting paid for our work by our passengers through Uber; not by Uber
You and I might not agree about that. Certainly the state of California dosent agree with it. But at least for now that's the way it is


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## Stevie The magic Unicorn (Apr 3, 2018)

oldfart said:


> I think we have gotten away from the subject of your original post. As I said above. I agree with the advice you gave in that post, which as I understood it was this. 'Whether we get a 1099 or not, we need to file an accurate tax return' Not getting a 1099 is not an excuse for filling an incomplete tax return
> 
> I don't know why my understanding or misunderstanding of what an independent contractor or sub-contractor is, has any connection to how Uber (and PayPal) reports the payments they handle.
> 
> ...


Frankly, I personally believe the "independent subcontractor" classification to be 100% BS, the cab companies have exploited it for decades for the cost saving benefits.

I used square as my credit card payment system for years, i never once in all the time i've had an account felt like i "Worked" for square, not one time ever.

Uber on the other hand is far more controlling, manipulative and heartless than the cab company I'm an IC for. With the cab company it's

"here's the keys and your trip sheet/log for the taxi have a nice day"

If i had the car for the whole 24 hour period (or a week even) i would just get the keys handed to me and my return time back and i can make my own schedule and durp around with the taxi and make money,build up my own client base, sit at the Magic Kingdom Cab stand, answer some dispatch calls, put an add up on craigslist for airport transportation, ect.

Yeah driving for the cab company is "here's the keys to a licensed taxi, return it with a full tank of gas or were gonna back charge you anyway, have a nice day"


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## LADryver (Jun 6, 2017)

Seamus said:


> I think most of us realize Uber and Lyft are scamming the "Payment Processor" classification @LADryver as they are clearly much more. However, be that as it may the IRS has let them get away with it for 10 years now so for the moment it is a "legal scam". Ironically there are many drivers that like the $20k threshold of 1099k because they recklessly don't report their income if they didn't get a 1099k. Some day that could very well come back to bite them in the arse. It is silly not to claim the income because with proper record keeping the tax is minimal and not worth the penalty of getting discovered down the road. Taxable Income is about 0-10% of the gross. If Uber ever gets audited their would be many drivers crapping their pants.


I like your response because you notice that Uber has been operating under the radar and that indeed the Piper would be collecting payment eventually. Uber since 2014 has been doing things certain ways that may be different than now, and also was smaller in scale compared to now. There are numerous types of activities that go on for years under the institutional IRS nose, that eventually get sniffed. The large size is one factor. The second is and will be potentially the way Uber chooses to scoff a law in the most populace state directed at them. The louder they get the closer they come to building interest for IRS to form a task force. That be as it may everyone affected should be forewarned, so that their i's are dotted and t's are crossed.


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## oldfart (Dec 22, 2017)

Stevie The magic Unicorn said:


> Frankly, I personally believe the "independent subcontractor" classification to be 100% BS, the cab companies have exploited it for decades for the cost saving benefits.
> 
> I used square as my credit card payment system for years, i never once in all the time i've had an account felt like i "Worked" for square, not one time ever.
> 
> ...


 The way I see it is that we are not subcontractors we are independent contractors,; businesses that drive for hire

And there are several different business models for taxied than the driver leasing the car from the cab company. There is that model but also independent operators that also own their own car and pay the cab company for the name and dispatch services and also one I'm familiar with where the cab company owns the car and buys insurance and the driver pays for gas the operation is highly structured. Drivers wear uniforms and have to take every ride offered

My point is that like Uber the drivers are all independent contractors


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## LADryver (Jun 6, 2017)

oldfart said:


> The way I see it is that we are not subcontractors we are independent contractors,; businesses that drive for hire
> 
> And there are several different business models for taxied than the driver leasing the car from the cab company. There is that model but also independent operators that also own their own car and pay the cab company for the name and dispatch services and also one I'm familiar with where the cab company owns the car and buys insurance and the driver pays for gas the operation is highly structured. Drivers wear uniforms and have to take every ride offered
> 
> My point is that like Uber the drivers are all independent contractors


I think I have it drilled down to an issue of nomenclature. There are "Contractors", "Sub-contractors" and "Independent Contractors". Ok so far? They are in order of actual "independence". Definitions: A "Contractor" interfaces with the government, the client, and the "Sub-contractors". "Sub-Contractors" are independent but working under the supervision of the "Contractor". The Contractor gets paid by the client then pays the Sub-contractors. Contractors work on client projects per budget, specifications, and schedule. A Contractor is either on the job or off the job depending on the satisfaction of the client. Therefore, in terms of the specific job, Contractors and Sub-contractors are not really independent. An Independent Contractor, however, is. They are neither Contractor nor Subcontractor. They are brought on to create a result. Contractors are used in construction most commonly, but they can also be in media and marketing. A Contractor will not hire an Independent Contractor, because an IC is not bound by the constraint of the job. However, an Independent Contractor is brought on by a client when something has to be done in a range of time, approximately to their specifications, and with quality. If a client makes demands on the IC, then they are where AB5 is. Classifying as Employee instead. True we are IC in the contract sense, but the Contractor keeps his clients as his for repeat business, and we do not. A contractor hires a company for leads, and we do not. We are told where our next ride will be picked up. That is not a lead. That is an option. The rider is not our client. Uber is our client. The rider is their client. Payment Processors do not have the clients.

If a driver were to get deactivated by the payment processor, are they still "in business"? And if so, what changes are necessary for this to happen?


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## KK2929 (Feb 9, 2017)

tohunt4me said:


> Wrong.
> I got a refund.
> No taxes paid.


----------------------
How can you get a refund if you have not paid any money into the system ? Just curious.


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## tohunt4me (Nov 23, 2015)

KK2929 said:


> ----------------------
> How can you get a refund if you have not paid any money into the system ? Just curious.


They sent me a check.

Also deducted my Jackson Hewitt fee for having taxes done

( i did not take all of the deductions i could have. I just did not want to pay. I left a Lot on the table)


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## LADryver (Jun 6, 2017)

tohunt4me said:


> They sent me a check.
> 
> Also deducted my Jackson Hewitt fee for having taxes done
> 
> ( i did not take all of the deductions i could have. I just did not want to pay. I left a Lot on the table)


I think that practice can trigger an audit if it is in a significant proportion. The IRS examines returns based in their expectations. Why not take everything? If you can't back it up, no problem not taking it.


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## Seamus (Jun 21, 2018)

KK2929 said:


> ----------------------
> How can you get a refund if you have not paid any money into the system ? Just curious.


EIC. Earned Income Credit is one way.


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## LADryver (Jun 6, 2017)

Seamus said:


> EIC. Earned Income Credit is one way.


Nobody is required to disclose their own tax information.


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## UberTaxPro (Oct 3, 2014)

tohunt4me said:


> Also deducted my Jackson Hewitt fee for having taxes done


Hopefully you mean the business % of your tax prep fee. Deducting the expense for personal tax prep is gone thru 2025. Just curious, how much did JH charge for your tax prep?


KK2929 said:


> ----------------------
> How can you get a refund if you have not paid any money into the system ? Just curious.


Here's 3 ways...
Earned Income Tax Credit 
Child Tax Credit 
The American Opportunity Tax Credit


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## percy_ardmore (Jun 4, 2019)

tohunt4me said:


> Wrong.
> I got a refund.
> No taxes paid.


Overpay estimated payments?


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## oldfart (Dec 22, 2017)

LADryver said:


> I think I have it drilled down to an issue of nomenclature. There are "Contractors", "Sub-contractors" and "Independent Contractors". Ok so far? They are in order of actual "independence". Definitions: A "Contractor" interfaces with the government, the client, and the "Sub-contractors". "Sub-Contractors" are independent but working under the supervision of the "Contractor". The Contractor gets paid by the client then pays the Sub-contractors. Contractors work on client projects per budget, specifications, and schedule. A Contractor is either on the job or off the job depending on the satisfaction of the client. Therefore, in terms of the specific job, Contractors and Sub-contractors are not really independent. An Independent Contractor, however, is. They are neither Contractor nor Subcontractor. They are brought on to create a result. Contractors are used in construction most commonly, but they can also be in media and marketing. A Contractor will not hire an Independent Contractor, because an IC is not bound by the constraint of the job. However, an Independent Contractor is brought on by a client when something has to be done in a range of time, approximately to their specifications, and with quality. If a client makes demands on the IC, then they are where AB5 is. Classifying as Employee instead. True we are IC in the contract sense, but the Contractor keeps his clients as his for repeat business, and we do not. A contractor hires a company for leads, and we do not. We are told where our next ride will be picked up. That is not a lead. That is an option. The rider is not our client. Uber is our client. The rider is their client. Payment Processors do not have the clients.
> 
> If a driver were to get deactivated by the payment processor, are they still "in business"? And if so, what changes are necessary for this to happen?


Three things

Uber is more than just a payment processor to us they also connect us with passengers and by the way most of the drivers ive met, do retai their customers for future business

Your distinctions between contractor, sub contractor and independent contractor are lost on me

The way things are today is that the passenger is our customer and we are ubers customer


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## LADryver (Jun 6, 2017)

oldfart said:


> Three things
> 
> Uber is more than just a payment processor to us they also connect us with passengers and by the way most of the drivers ive met, do retai their customers for future business
> 
> ...


Passenger is Uber's customer. Customer reports back to Uber, Uber makes us answer for it, or we get deactivated because of it. Customer retention is against TOS.


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