Charge Backs and Taxes

[indaville]

I use a CPA. Over the course of the year he pays for his fee with the help he gives me in reducing my taxes. Be sure to find a good one, not all CPA's know what they are talking about. Kind of like insurance agents!!!

Matt

 

[LaffAgent]

I understand the current tax concern, but there seems to be a much more critical question. Why such significant chargebacks? If "all", or "most", or even "many" cases are charged back, that's a death sentence for your career. Maybe it's the wrong company, maybe the wrong products, the wrong clients, the wrong approach, but something's wrong. The tax issue is a today issue, the chargeback issue is a forever issue.

Sorry if it comes across harsh, I don't mean it that way.

 

[somarco]

If you are on a cash basis, like most of us are, you report & pay taxes based on your gross income (as reflected on your 1099) less your expenses. If you can get a corrected 1099, you use that even if you have to file an amended return. If not, you report the chargebacks (with documentation) in the tax year in which the money was deducted from your account.

The 1099 should reflect net, not gross. If they paid you $10,000 in 2005 and charged back $3000 in the same year, your 1099 should reflect $7000. If the chargebacks did not occur until 2006, and your net commission was less than $600, there will be no 1099 issued for 2006. In that case you will need to document the chargebacks on your Schedule C along with commission & bank statements to support your write off against other 2006 commissions.

Of course if you never took advances this would not be an issue.

 

[Crabcake Johnny]

Yes, very good post. Less concern about the tax liability and more concern about why deals are charging back. In my case with UGA is was a poor performing product. If that's the case then stop selling it.

 

[Crabcake Johnny]

If you are on a cash basis, like most of us are, you report & pay taxes based on your gross income (as reflected on your 1099) less your expenses. If you can get a corrected 1099, you use that even if you have to file an amended return. If not, you report the chargebacks (with documentation) in the tax year in which the money was deducted from your account.

The 1099 should reflect net, not gross. If they paid you $10,000 in 2005 and charged back $3000 in the same year, your 1099 should reflect $7000. If the chargebacks did not occur until 2006, and your net commission was less than $600, there will be no 1099 issued for 2006. In that case you will need to document the chargebacks on your Schedule C along with commission & bank statements to support your write off against other 2006 commissions.

Of course if you never took advances this would not be an issue.

If you didn't take advances most likely none of this would be an issue since you'd be an ass't manager at Walmart after 3 months

 

[somarco]

I dont take advances. Only did once and it was a mistake. Somehow I have survived over 30 years in the industry without advances.

Now who is laughing?

 

[johnrocks]

I dont take advances. Only did once and it was a mistake. Somehow I have survived over 30 years in the industry without advances.

Now who is laughing?

I looooove as earned because of the fact that even if I get sick or take a month long trip to the lake or just want to sit on my fat ass , I will get a check that month. Kinda like being able to get on a govt'. handout program but having to actually WORK to get on the handout program.I for one wish that I would have started out with no advances and these last few months sure would have been easier to deal with.

 

[Crabcake Johnny]

I mix it. I take an Assurant advance and everything else is as-earned - including life. So I get a nice fatty check each week from Assurant yet nice as-earned monthly commissions also. Then again, renewals at this point pay 100% of my household bills.

And as-earned is fine if you're breaking into the biz with a working spouse. Without that working spouse you'll need about 6 months of bills in the bank. Not too many new agents have that.

 

[CHUMPS FROM OXFORD]

As strange as it sounds, I have never taken an advance.

Then again...my parents payed for my college education and bought me a car when I started in the business 26 years ago. That was a hell of an advance.

 

[J.R.]

Besides having a calm mind knowing that you have checks coming in, is there that much of a problem accepting advances if you are responsible and can balance your financial plan accordingly!