I used Upwork for a little while before finding a full-time job.
In that time, I only got one tiny job filling a survey that paid $5. Of course, Upwork took a dollar from that, leaving me with a $4 profit.
Do I have to pay taxes on this small amount?
How should I pay taxes on such a small amount?
Would I just take the invoice and put the information on a 1099-NEC?
I've been looking everywhere for an answer for this, including the IRS website but I can't find anything and I'm not paying a tax advisor on something so seemingly miniscule.
Wayne, I can assure you that nobody who works for Upwork decides whether or not you need to pay taxes. Also, Upwork employees to not provide tax advice, but they ask users of the site to consult with local authorities and experts.
Good thing I'm trying to ask the community, where someone who may have encountered and solved a similar problem before could be, and not directly to Upwork employees for advice, then.
You live in the United States.
In the following sentences, I am NOT talking about YOU or YOUR taxes. I am speaking hypothetically and contemplating some general concepts. (Of course you should report everything to the IRS that you are legally required to report.)
If you figure out how to report that four dollars of income, and then you report it, it will not change the amount of tax that you pay.
This year and last year, Upwork DOES NOT REPORT your earnings to the IRS unless you have more than 200 transactions AND more than $20,000. Upwork recently announced that beginning next year they will report income to the U.S. for all U.S. residents who earn more than $600 during a given year. Read this.
You are under that amount.
If you are caught NOT paying your tax on four dollars of income, there is no criminal penalty. You would be required to pay the IRS the amount of tax owed on that income (which would be zero), PLUS interest (which would also be zero).
So, you're telling me that since I didn't exceed 200 trades and $20k, Upwork would report my measly $4 to the IRS and that I should report it on a form somehow, even if the consequences of not doing so would be practically nothing?
That's what I was fearing and seems like an unnecessary hassle. Well, I was planning on reporting it anyways just in case I was supposed to but I'm not sure where to start. Should I just put the information that's on the invoice from the job on a 1099-NEC?
I've also noticed while searching around online that the IRS has a helpline so I may ask them through that.
Wayne M wrote:
So, you're telling me that since I didn't exceed 200 trades and $20k, Upwork would report my measly $4 to the IRS
No, he is (clearly) telling you the opposite.
No, I am not saying Upwork will report your earnings. I am saying that Upwork will NOT report your earnings.
My post had a typo that I have now corrected, so it read the opposite of what I meant.
Don't call the IRS helpline about this four dollars.
Preston H wrote:
Upwork recently announced that beginning next year they will report income to the U.S. for all U.S. residents who earn more than $600 during a given year.).
Where did Upwork announce anything of the sort and why would Upwork report such earnings next year when the new rules don't come into force until 2023? (the 2022 earnings would be reported in 2023)
re: "Where did Upwork announce anything of the sort...?"
I have no idea. I was just basing that on what I read in the Upwork thread I linked to.
For the purpose of the present thread, it doesn't matter, because the original poster's $4 earning is under the present $20,000 threshold. And if anybody reads this in the future and wonders about $4, that amount is still under the $600 threshold.
I may have misunderstood what Will wrote, but I linked to it. People can read that thread for themselves.