How the New IRS Form 1099K Impacts Your Tax Return

[iwiw60]

FYI for USA Sellers...

How The New IRS Form 1099K Impacts Your Tax Return
By Barbara Weltman
EcommerceBytes.com
January 02, 2012
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This year, companies that process credit and debit cards as well as third-party network payments such as PayPal, Amazon.com and Google are required to report to merchants and to the IRS the gross amount of the transactions they've processed. If the small business exception, which is fewer than 200 transactions totaling less than $20,000, does not apply to you and you receive Forms 1099-K, be sure to handle them properly on your tax return.

Where to enter amounts from 1099-K
Enter the amounts reported to you on the 1099s on your tax return so that the IRS computers can match up your entries to amounts that have been reported to them. Unfortunately, this year, the tax return is confusing. All of the forms for business returns have a new line for entering amounts from Forms 1099-K. For example, Schedule C of Form 1040 for sole proprietors and one-member limited liability companies has a new line 1a for entering amounts from Forms 1099-K.

However, the IRS has deferred the requirement for reporting 1099-K amounts on the new line. Instructions to all the business returns, including Schedule C of Form 1040, say to enter zero on line designated for reporting amounts from Forms 1099-K, and instead report such amounts, along with other gross receipts, on the line for all gross receipts. Presumably, this is where the IRS computers will be looking for 1099-K transactions.

Don't over-report income
The amounts reported to you on the 1099-Ks are the gross amount of the transactions you've made throughout 2011. They do not take into account any returns, allowances, cash-backs, or other adjustments to transactions. Be sure to take these reductions to gross receipts into account on your return so that you don't over-report income.

Watch for duplicate reporting
If your unincorporated business provides personal services in addition to selling goods, you may receive a Form 1099-MISC to report the payment of services over $600 in the year. This year, the 1099-MISC is to be issued only for the payment of services in cash or by check; 1099-K is to be used for payments by credit card, electronic transfer, etc. However, don't be surprised if you receive a 1099-MISC for the payment of services by credit card; issuers may be confused by the change in reporting requirements this year.

[DZAMBO]

Well…Dzambo just finished way below this lane…
108 transactions total online sales in 2011…
A little less of $5,000 from IRS limit…
So in both categories this does NOT apply for me….and Pay Pal will leave me alone for the last year gross amount for online transactions and sales…and I am glad not many buy from me in the last year holiday and I pull out most of my items from online sales in the last holiday just to make sure if someone goes for ‘’wild shopping’’ and give to me headache for Tax return…for eBid I not pull out any of my items from the listing because ‘’I know’’ someone will not buy all my items from here which is only maybe needed for me to ‘’broke out’’ the limit from IRS…Dzambo always ‘’thinking’’ in advance….and no necessary surprise…and by the way IRS has enough money without me…so….let’s roll the dices for 2012….buy…buy…buy…sell...sell...sell…..

P.S. I like our Tax Law…person need to make at least $20.000 to be called business seller for the profit…and not $200 to be called business seller for the profit…I always call that ‘’hobby seller for the profit’’ and that mean ‘’ VERY’’ different tax deducible for the person who report that ‘’big’’ amount and call yourself business seller…Well…I have business license for my real job and for that I will pay what I owe…but for online sales NOT because I am still ‘’hobby’’ seller in the eyes of tax man….and ‘’I Like’’ that…

[JaBek1]

Of course, you should have been keeping you books properly and reporting you income on you tax return all along anyway. Don't forget to keep them receipts so you can justify expenses in case you get audited.

[DZAMBO]

Of course, you should have been keeping you books properly and reporting you income on you tax return all along anyway. Don't forget to keep them receipts so you can justify expenses in case you get audited.

All this is in my books….no mistake every transaction and every payment to me…and I expect from Pay Pal to NOT report my transaction from online sales because ‘’THE LAW’’ clearly say: this and that…and I not going to go alone on this and be ‘’smart’’ and give my money ‘’away’’…but like I say I have everything in the books…for my regular business I run now about 10 years and I know I can’t escape to pay tax because I NOT paying taxes week after week from my wages I pay all in one time in end of year….I decide that because I think is much better for me to keep my earned money from my job week after week and try to do with that my money in whole years rather I give IRS week after week and ‘’wait’’ whole year to send me some back (maybe)…is just similar like for any bank if you keep bigger money in your own account bank will use that your the money and invest in whole month to make profit for the bank and give to you a very little interest for that…anybody can see how much you will have interest from the bank every month if you keep bigger amount on it and how much you will pay interest if you take the loan from the bank…is very huge differences…in my opinion like for tax DON’T give anything if you don’t have to…AMEN…...

P.S. Thanks for the reply ''Bek''...and I wish you good rest of the day......

[JaBek1]

I have a retail tax certificate to collect & remit sales/use tax as required by my states laws. It also gives me an exemption on paying sales/use tax on items purchased for resale. No sense in paying the sales tax twice.

I'm really not concerned about eBay reporting income to the IRS. The 1099 is just more official litter. It's amazing how many more pages my return is since the reduction of paperwork act. Luckily I only have to make one hard copy since I file electronically.

[adruml]

Well…Dzambo just finished way below this lane…
108 transactions total online sales in 2011…
A little less of $5,000 from IRS limit…
P.S. I like our Tax Law…person need to make at least $20.000 to be called business seller for the profit… seller in the eyes of tax man….and ‘’I Like’’ that…

108 transactions for a total of around $15,000.00 ($5,000.00) less then limit. That's an average of $138.89 per item. That is fantastic so I went ahead and took a look at the feedback/items sold to reach this average, hmmm. Are you sure about your figures? Something appears off.

[DZAMBO]

108 transactions for a total of around $15,000.00 ($5,000.00) less then limit. That's an average of $138.89 per item. That is fantastic so I went ahead and took a look at the feedback/items sold to reach this average, hmmm. Are you sure about your figures? Something appears off.

Well…like I say…all is true…and I accept payment using Pay Pal and this is all matter for me…Internet is very big and eBid is not only auction site or place where you can sell anything and everything…and by the way if we look how much I sell only on eBid I just say not very much in amount of the money but I guarantee you how I am long in here I sell worth of the money more of your one ‘’Guitars’’ (a little more expensive) not cymbals…let’s just say two Guitars to make sure…just prove my opinion on eBid stickers, cards, low priced items can beat high priced items like yours…and by the way you don’t worry for Tax return from eBid transactions because you’re not sell anything at all…but if Tax man count how much you posted threads on eBid and charge you for that I guarantee you, you will pay very high amount…...good day to you ‘’Al’’ and keep doing good job…...

[adruml]

Well…like I say…all is true…and I accept payment using Pay Pal and this is all matter for me…Internet is very big and eBid is not only auction site or place where you can sell anything and everything…and by the way if we look how much I sell only on eBid I just say not very much in amount of the money but I guarantee you how I am long in here I sell worth of the money more of your one ‘’Guitars’’ (a little more expensive) not cymbals…let’s just say two Guitars to make sure…just prove my opinion on eBid stickers, cards, low priced items can beat high priced items like yours…and by the way you don’t worry for Tax return from eBid transactions because you’re not sell anything at all…but if Tax man count how much you posted threads on eBid and charge you for that I guarantee you, you will pay very high amount…...good day to you ‘’Al’’ and keep doing good job…...

108 transactions for a total of around $15,000.00 ($5,000.00) less then limit. That's an average of $138.89 per item. That is fantastic so I went ahead and took a look at the feedback/items sold to reach this average, hmmm. Are you sure about your figures? Something appears off.

[DZAMBO]

108 transactions for a total of around $15,000.00 ($5,000.00) less then limit. That's an average of $138.89 per item. That is fantastic so I went ahead and took a look at the feedback/items sold to reach this average, hmmm. Are you sure about your figures? Something appears off.

You look in the wrong place like ‘’always’’…but that’s ok I forgive you…...