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Updates to Tax Documents for US-Based Talent (2022 Tax Year): Questions & Feedback

US Tax law requires that Upwork provide certain US-based freelancers with IRS form 1099-K as proof of income. Due to recent changes to US tax law (including The American Rescue Plan Act of 2021), some freelancers who did not qualify in the past may qualify to receive a 1099-K starting with the 2022 tax year. The new rule will be effective beginning with payment transactions settled after December 31, 2021.

 

Check out the announcement and let us know your thoughts about these updates in the comments below.


Thanks,
Mike J.
22 REPLIES 22
mwiggenhorn
Community Member

Mike, this is important.  I think it needs an email now to, at least, all US freelancers.  And maybe another reminder in the fall.  This may impact those who pay projected taxes quarterly and how much they pay,  Not saying that people cheat a little, but...

wescowley
Community Member

Mike, thanks. This post is probably the clearest explanation of the change I've seen.

rhensley
Community Member

Super important news, glad for the update here. 

 

However, disappointed I only found it because I proactively searched for "Upwork tax changes for 2022" on Google. I think this type of important announcement should be emailed directly to all talent in the USA.  

 

I actually subscribe to this announcements category of the forum and didn't even get a notification of the new post - super weird, but it speaks to the importance of emailing talent directly for policy or law changes that impact us.  Please consider as feedback ๐Ÿ™‚

a_lipsey
Community Member

 Hi Mike, can you clarify something? My tax structure is an S-Corp, so I do not typically receive 1099s. For those freelancers who have a tax status other than a sole proprietor, who do not receive 1099s anyhow, we will not be receiving 1099s then, correct? Because if you sent me a 1099 that would be inaccurate, as the money goes into my S-corp, where I draw a salary, not to me, personally. 

 

Thanks. 

vladag
Community Manager
Community Manager

Hi Amanda,

Thanks for the question. We checked with our Tax team and since the information we'll be providing and possibly discussing further is specific to your account, I've asked our Support team to reach out to you with an update. Our agent will be providing more information soon and we'll ensure to address all your questions and provide all the necessary information. 

~ Vladimir
Upwork
a_lipsey
Community Member

I did not ask for account specific information or for you to escalate anything. I asked a generic question that could apply to any of us. Do not open tickets for me that I have not asked for and your "Help" did nothing but spout back to me old policy anyhow and never answered my question. 

 

**Edited for Community Guidelines**

Amanda,

 

While checking regarding your concern we've noticed that some information may have been missing in your settings. We cannot discuss such details publicly and therefore arranged for this information to be communicated via a ticket.

In general, we've confirmed with the team that Upwork needs to issue 1099-K to all freelancer accounts irrespective of the form of business (Sole proprietor/Corporation/etc). You'll receive a 1099-K only if you meet the threshold of 200 transactions and $20,000 (For 2022 transactions to be reported in January 2023, threshold will be $600).

~ Valeria
Upwork

Valeria, to be accurate, a ticket was not created bc I had information missing. That topic was only brought up after the ticket had been created for some other reason. That was not why a ticket was created. Nor did it turn out that any information was missing from my account; this was some glitch on Upwork's end, and I confirmed with support that no information was missing.  I am correcting this for accuracy. Thank you. 

a_lipsey
Community Member

Hi about instead of escalating my question to support that doesn't even bother to read the question then sends me a useless email that clearly has no understanding of the question, and opening a ticket for which I have not requested, you simply do me the courtesy of responding to me here. I really HATE when you respond to my private email inbox with responses that are not even relevant instead of just responding here as asked. Stop  reading tickets for me when I haven't asked. 

sparkesusan
Community Member

When are we supposed to receive a 1099-K?I have not received one yet.

Hi Susan,


Please, note that the new threshold takes effect for any transactions settling after December 31, 2021. This doesn't impact your tax return for 2021. If you qualify under the new law, a 1099-K will be issued to you in 2023 for your 2022 earnings.
Freelancers who qualify to receive 1099-K for 2021 (they earned at least $20,000 over at least 200 transactions) will  receive a copy via U.S. Postal Service by January 31.

~ Valeria
Upwork
kellydj
Community Member

Hi. I am so confused. I apologize, but if we don't earn enough to qualify for a 1099 (e.g, less than $1000), how do we claim the earnings on our tax return? Thank you.

Use your business records, the new Billings and Earnings report, or the Transactions report. The IRS does not require a 1099 for you to report your income. You can't submit a form you don't have; the reason you don't have it is that the IRS doesn't require or expect it of you.

103abf08
Community Member

I've been wondering this too. Can anyone chime in here about the 2022 rules? Also, if a 1099-K will be sent, will the amount be for gross (before Upwork fees) or Net (after Upwork fees)? Thanks!

vladag
Community Manager
Community Manager

Hi Paul,

Thank you the question. Please refer to the information Mike shared in the announcement here. Note that I've moved your post to the main discussion thread so you can check to the additional information we shared, ask questions or share feedback with fellow freelancers.

To your question, a 1099-K is a record of payments, not earnings. In accounting terms, this is a โ€œgrossโ€ total rather than โ€œnetโ€. As such, it includes all payments to the freelancer on all contracts. This includes funds you may have then paid to Upwork as fees or to your clients as refunds rather than withdrawing. You can find more details in this Help article.

~ Vladimir
Upwork

Just wondering when we will receive or be given access to download a 1099 form for Upwork?


Susan S wrote:

Just wondering when we will receive or be given access to download a 1099 form for Upwork?


Unless you made $20k in over 200 transactions during the last year, you won't get one.

Hello Susan,

 

Since you and I are in the United States, Freelancers should receive a 1099-MISC form by Jan. 31 from any company that paid them more than $600 for the tax year that just ended. However, whether or not you receive a 1099 form, you and I are responsible for reporting all our income, including any cash payments.

 

You can read more about Upwork's process here.

 

Report Income from Upwork โ€“ Upwork Customer Service & Support | Upwork Help

4c67d3e0
Community Member

Hi Mike & Team - I'm a customer and have used multiple Upwork contractors who are US-based for deliverables that are paid for by an FEC-registered political campaign committee.  I'm told by our compliance firm that I need a W-9 from either Upwork or the individual contractors.   I could use some guidance and outreach to resolve this issue.   Is there anyone I can talk to provide clarification other than a bot that does not provide answers?  -Scott

Hi Scott,

 

I've shared your concern with the team and one of our agents will be reaching out to you directly via a support ticket to assist you further.

~ Luiggi
Upwork
3498b94c
Community Member

Hi Mike,

 

Does this also mean, as a client hiring freelancers in 2022, I do not have to worry about filing their 1099s since you would be filing them for everyone who has income above $600?

Regardless of $600, or $20,000 (with the late-2022 IRS change to delay the $600 rule to 2023), you do NOT file 1099s for clients, at all, for payments through Upwork, regardless of amount.

 

SOURCE - see FAQ "Why donโ€™t I have to send a 1099-MISC, 1099-NEC, or 1099-K?"

 

This is a HUGE part of the reason why I'm glad that the rule has been pushed to 2023. Clients feel that they have to file 1099s for freelancers even though they were paid through third-party settlement organizations such as Upwork Escrow โ€“ when they don't. This well-meaning act (after all, we NEVER want to be on the IRS' bad side by failing to submit a form!) seems like the right thing to do, but can actually introduce complications, especially when the new rules kick in for the 2023 tax year.

 

Currently, with the $20,000 threshold in place โ€“ if a client sends a 1099-NEC for an amount of $19,999 or less, then thankfully the freelancer isn't getting a duplicate, even though the 1099-NEC should not have been sent at all for payments that were made through Upwork. But at the very least, the IRS is only receiving one form for that income, so as long as the taxpayer also reports it once, then things match up and shouldn't generate IRS confusion.

 

However, if the threshold were $600, then the well-inteneded 1099-NEC from a client trying to do things right may actually lead to headaches for the freelancer, because now it's on the freelancer to explain why they reported only the 1099-K income reported by Upwork, but not the 1099-NEC income reported by the client (which should only be for payments that were NOT issued through a third-party settlement organization โ€“ so now that same income is erroneously reported on two different forms).

 

In short, I really hope that Upwork loudly leads the way reminding clients in 2023 to NOT issue a 1099, at all, ever, to a freelancer that was paid through Upwork Escrow, regardless of amount, AND reminding freelancers of why they should not be asking Upwork clients to send a 1099-NEC for Upwork payments, ever.