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Archive for the ‘Form 1099-K’ Category

PostHeaderIcon What is Form 1099-K?

You should be getting your tax forms in the mail if you haven’t already.  The deadline for most forms we’re used to is January 31 so there could be some stragglers but I’ve also heard that some people already had their forms last week.  One form you may not recognize is the new Form 1099-K. If you accept credit cards or do a lot of business via a company like paypal, the Form 1099-K may be in your future.

In the IRS’s ongoing effort to have everyone else do their job for them, merchant services and third party payment processors are required to issue Form 1099-K to those they service.  If you accept any amount via credit card or use a third party payment processor like Paypal (and you have more then $20,000 in revenue and there are more then 200 transactions), then you should be receiving your forms soon.  Both the Schedule C and Schedule E have been changed to accommodate these new forms so be sure if you’re doing your return yourself, that you put everything on the right line.  For more information, here’s what the IRS has to say about the new form.

PostHeaderIcon The New Form 1040, Schedule C

Last week we talked about Schedule E and this week it’s Schedule C.  Yes, Schedule C has some changes and they look a lot like the changes on the new Schedule E.

First up is Lines I and J.  This is the IRS’ trap to get more Form 1099 compliance.  Be very careful how you answer these questions because if you have a large amount of expenses like professional fees and repairs, you could be opening yourself up to a notice or having the IRS take a second look at your return.

Also new is line 1a.    This is to report income from the new Form 1099-K that reports merchant card and third party payments.  If you take credit cards or use paypal, look for your 1099-K and this is where you’ll report that income.

Also new is line 27b.  Right now it’s reserved for future use.  I’m not sure where they’re going with that one so if someone knows, feel free to leave a comment.

That’s it.  These are the first changes to these forms in a while and it gives a pretty good indication of what the IRS is on the lookout for.  Their budget is being cut so they’re looking to 1099 compliance to help them out and they’re at least making taxpayers think about the 1099 issue by answering the questions.