What amount does Upwork report on 1099s? Gross or net?

[solidwriting]

Upwork takes 20% of most jobs for freelancers. So when they report MY income to the IRS do they report the total amount of the job? Or the amount I actually receive?

In other words, do I have to show the total amount as a receivable in my accounting, less the fee?

That seems ballsy, frankly, since my income is actually their net.

And why isn't there a clearer explanation for that on this site?!? I'm no dummy, and still couldn't find it quickly.

[lysis10]

well, the first year we all assumed it was the full amount, and then we got corrected 1099s and said "oops, that doesn't include the fees." oy

Interesting that I don't think there was 1 thread on it, so that tells ya how many people make $20k+ in the US on here.

But normally, they report all of it and then you put in for your deductions on the fees.

[tlsanders]

Jennifer, are you saying the corrected 1099s DID include the fees, and that's the way they should be/will be issue?

That's how I think it should be, but from what I just read I'm not sure in which direction they were corrected.

[lysis10]

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@Tiffany S wrote:

Jennifer, are you saying the corrected 1099s DID include the fees, and that's the way they should be/will be issue?

That's how I think it should be, but from what I just read I'm not sure in which direction they were corrected.

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 They sent the first one that already deducted the fees. After about a month..maybe a few weeks... we got an email that said "oops, our bad, we're reissuing another 1099 that does NOT have the fees deducted."

I see what I said was confusing.

So basically, first one I got was about $59k. Second one was about $65k.

[tlsanders]

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@Mary B wrote:

Upwork takes 20% of most jobs for freelancers. So when they report MY income to the IRS do they report the total amount of the job? Or the amount I actually receive?

In other words, do I have to show the total amount as a receivable in my accounting, less the fee?

That seems ballsy, frankly, since my income is actually their net.

No, it's not. The client pays you $500, and you pay Upwork $100 for its services. The fact that you don't participate in the allocation doesn't change the nature of the payments. The reality is no different than if Upwork cut you a check for $500 and then sent you an invoice for $100 and you paid it and listed it as a business expense.

And why isn't there a clearer explanation for that on this site?!? I'm no dummy, and still couldn't find it quickly.

Probably because everybody's tax situation is different, it's an international platform, and Upwork is in no position to provide tax advise to millions of differently-situated people around the world.

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[sam-sly]

Mary, I think most freelancers don't earn enough on this platform to receive a 1099 from Upwork. Upwork only sends 1099s to freelancers who earned over $20k in the calendar year. My understanding is they are in the same category as a payment processing service like PayPal. Some businesses send 1099s if they pay over $600, but not Upwork and others in the category.

I think my accountant used the total amount before fees and deducted the fees. I gave her the "lifetime earnings by client" report ran for the calendar year. (I think). The report included total earnings for each client and total fees deducted for each client. (By the way, this is not tax advice, I am not a tax pro). This works out exactly the same in terms of taxable income as it would if I just reported what I received.

For other middle-person platforms, I only report the amount I am paid since I don't always know the total anyway. I receive payment into a specific business checking account so that makes it easier to track. I would do the same with Upwork if they didn't generate the reports.

[solidwriting]

Thanks, Samantha. That makes sense.

I haven't used Upwork much, but I'm pretty sure I remember getting regular 1099's from Elance. And as you say, it's confusing because many other content platforms and intermediaries do NOT reveal what they charge the end user.

I post invoices for contract work to my accounts receivable and mark them as paid when I receive the income, so I guess I will just continue to post the amount due as the Upwork net ... it's simpler (and less depressing than tracking their horrendous fees).

Warm regards,

Mary

[tlsanders]

Mary, the law regarding how payment platforms issue 1099s changed at some point in the last couple of years, which would explain the difference from the Elance practice.

The difference you're describing between Upwork and other platforms you may work through is in the business model. Many platforms are the service provider for the client and contract with freelancers to do the work. In that model, you are working for the platform and the platform is providing the service to the end client. That's not how Upwork works, though. Clients don't pay Upwork. Upwork simply escrows the client's payment to you (in the case of a fixed price contract) or provides payment processing services (in the case of an hourly contract).