when does Upwork report my income to IRS?

[logodesignbee]

Hello Everyone,

I would like to confirm at what stage does Upwork report our income to IRS. Here are a few conditions,

- If I have created an Upwork account but still haven't verified my identity nor have submitted W9 so does Upwork still be able to report my income to IRS(please note that I also have drawn any funds from my account)

- If Upwork needs my identity verification and w9 information to report my income to IRS then what would happen if I submit this information after 1 year. How will Upwork report my last account year payment to IRS..... as last year's income OR that year's income when it is drawn to the bank account(in 2nd account year)

Thank you

[florydev]

I don't believe that Upwork submits anything to the IRS for someone not hired through Upwork payroll.  From my read of it they will only submit a 1099-K if you have more than 200 transactions and $20k.

https://support.upwork.com/hc/en-us/articles/211063958-Report-Income-from-Upwork

You are responsible for submitting your own income to the IRS.

[logodesignbee]

but 1099-K is also like they are reporting my income to IRS so at the end of the accounting year I have to disclose it.

My concern is how will it work if my account has earned let's say $10,000 but I haven't verified it yet nor have submitted any tax-related information.

[florydev]

No they only send it if you make more than 20k and have 200+ transactions.  That is a lot for a little through the course of a year.  

[florydev]

I am not sure you are following me.  Let me make clear, I am not an accountant, this is just my understanding and experience,  you should really talk to your accountant.  

I don't believe Upwork files anything with the IRS unless you have make more than $20,000 on more than 200 transactions.  You should read this here and watch the Tax Wise webinar that is linked in it:

https://support.upwork.com/hc/en-us/articles/211063958-Report-Income-from-Upwork

The  reason I don't believe they file anything is last year I did not receive anything, I did make more than $20k but was no where close to 200 transactions.  I have maybe seen a few profiles that have 200 transactions lifetime here on Upwork I cannot imagine too many that get to that in a year.

YOU are responsible for reporting your income when you file your taxes, it is illegal not to.  I think any reasonable self-employed person in the US should also be paying their estimated taxes quarterly to avoid paying a penalty.

[logodesignbee]

Mark,

Thank you for sharing the details with me. Actually, my concern is a little different.

I actually want to know the actual time when I should provide my Upwork earning to IRS

will it be when the client has released the funds to me for the project

OR

when I draw money to my bank account as before that I have not received the payment in hand(or does Upwork account balance considered as user's in hand money)

Thanks

[florydev]

I think it would be in your best interest to talk to an accountant.

[researchediting]

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Naushad D wrote:

....I actually want to know the actual time when I should provide my Upwork earning to IRS

will it be when the client has released the funds to me for the project

OR

when I draw money to my bank account as before that I have not received the payment in hand(or does Upwork account balance considered as user's in hand money)

---

This is public information, available from IRS.gov. To the best of my recollection, income is not income till you have it, but why should you believe me over the IRS?

I know, or think I know, a bit about US tax law. I am also very glad to have all filing decisions made by my accountant, subject to my review.

[kerryveale]

I have been self employed for the past 15 years. I use the cash basis method of accounting in my business, and I use Turbotax. It's not that hard. 

Here is how Turbotax answers your question:

"Under the cash basis method you include income you actually or constructively receive during the year and deduct expenses for your business in the year you actually pay them."

So, for 2020 taxes, you will report the income that actually reached your checking account in 2020, even if some of it was billed to the client in 2019. And if you charged some expenses on your credit card in 2019, but paid that credit card bill in 2020, those expenses will be reported on your 2020 taxes.