Plexus Direct Sales

[JenMO]

Client got into the business so she would get the discount on her own purchases. She does not sell to anyone else. She received a 1099. Trying to decide how to handle. She orders the product, company pays her a commission on her own purchase and then it gets reported on a 1099. So she is paying taxes on the commission of a personal item she uses?

[ATSMAN]

Client got into the business so she would get the discount on her own purchases. She does not sell to anyone else. She received a 1099. Trying to decide how to handle. She orders the product, company pays her a commission on her own purchase and then it gets reported on a 1099. So she is paying taxes on the commission of a personal item she uses?

Yes. Commission is taxable income. COGS is 0 because she withdrew 100% for personal use.

The question then becomes that she is really doing this for hobby NOT to make a profit. I think given the circumstances it could be reported on line 21 and not pay the SE tax!

[oceanlovin'ea]

technically it is not commissions. It is a discount on her purchases. But the companies usually issue 1099-Misc if the amount is over $600 which puts these people in this position.

Linda, EA