New IRS form 1099 K ongoing in 2011, if a business processes credit cards as a form of payment, credit card processor must issue you a form 1099-K for the gross amount received if you processed more than 200 payments AND for more than $20,000. The IRS tax form 1099-K was formed as part of the Housing and Economic Recovery Act of 2008 to increase compliance in reporting sales income by merchants. Because the IRS also gets a copy of the form, it will help the agency to determine whether or not business owners are reporting correct sales figures on their tax returns.
If you are an online seller and meet these thresholds, you are more than a “casual seller” and you may consider starting a business entity to protect your identity and for tracking your expenses to offset the revenue that will be reported on your 1099-K. It will be for the gross amount and will not include a reduction for their fees. If you did not already know, effective in 2011, Form 1099-K is required for “reportable payment transactions.” In other words, most payments for goods and services paid by payment card (including credit and debit cards and some stored value cards) or third party networks will now be reported to the IRS via a new Form 1099-K, Merchant Card and Third-Party Payments.
Regarding 1099-K reporting requirements: “The reporting threshold is an aggregate value of third-party network transactions for a merchant of $20,000 or more for the calendar year and aggregate transactions of 200 or more. This reporting requirement is effective for sales made on or after January 1, 2011.
No comments:
Post a Comment