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The 1099-K a new form created by the IRS for people who sell on Amazon or eBay and amass $20,000 in sales. (More specifics in link)
It's linked to Amazon Payments and Paypal specifically. but I suspect Square and others will participate.

http://cashmoneylife.com/1099-k-form-reporting-requirements/

Edit : Must be 20k AND 200+ transactions. So if you sell 1 thing for 20k don't expect a 1099-k

Edit 2: Even if you get a 1099-K for 2011, you can put 0 in line 1A. It's allowed for 2011.

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what does they have to do with the 1099-K ?

xoneinax (Mar. 23, 2013 @ 10:57a) |

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For 2011, the IRS is not requiring you to report 1099-K seperately. There isn't a spot on the 1040 to include it.

Actually there is Elektronic

Schedule C Line 1A
1a Merchant card and third party payments. For 2011, enter -0- ...

That's going to be matched up on the 1099-K

Ok, I was half-wrong...there is a place to report it, but you don't for 2011 - at least we know how it will be handled for 2012.

huh? the 1099-k starts to be reported in 2011.

http://www.irs.gov/irs/article/0,,id=215740,00.html

Here is the instructions for Schedule C. (IRS PDF)

Here are instructions for 1099-k (IRS PDF)

I feel it's important to point out that it has to be 200+ transactions AND $20k+ in sales, not either/or.

dpid said:   huh? the 1099-k starts to be reported in 2011.

http://www.irs.gov/irs/article/0,,id=215740,00.html


Starts to be reported to the IRS and You. You do not have to record the 1099-K value on your Schedule C for 2011 (see schedule C form for 2011 where it says "enter -0- for 2011"), likely because no one knew in advance of the form being issued how the 1099-K would be handled as far as what documentation you would need to show your cost basis.

In the future, this will probably make some churn activities taxable.

EDIT: Thanks for the Red

Q=elektronic;16647826]dpid said:   huh? the 1099-k starts to be reported in 2011.

http://www.irs.gov/irs/article/0,,id=215740,00.html



"In the future, this will probably make some churn activities taxable."

No. This is not making anything taxable that was not already taxable before. This is making people who did not report income report it and pay taxes they owe on any profits

elektronic said:   dpid said:   huh? the 1099-k starts to be reported in 2011.

http://www.irs.gov/irs/article/0,,id=215740,00.html


Starts to be reported to the IRS and You. You do not have to record the 1099-K value on your Schedule C for 2011 (see schedule C form for 2011 where it says "enter -0- for 2011"), likely because no one knew in advance of the form being issued how the 1099-K would be handled as far as what documentation you would need to show your cost basis.

In the future, this will probably make some churn activities taxable.

EDIT: Thanks for the Red


Ah, I see what you are seeing now. I took off the red. I was under impression because you received 1099K, you had to report it on the line on Sch. C.

I guess you don't have to put the 1099K amount on Schedule C for 2011.

Need advice : I created a personal PayPal account for a fundraiser for a kid with critical health condition. Raised close to $30K from 500+ donors. Every penny was transferred to a new personal checking account I created and was wire transferred to the hospital's account. I have statements for each donation and transfers to bank and then to hospital. I also have hospital invoice for treatment cost etc. I volunteered to do it because it was a time-critical to raise funds and save that infants life. Now I wonder if I need to submit 1099-K and will it be treated as income. I didn't earn a penny from this and I have records to prove it. I plan to visit a CPA, but want to FW community's opinion about it.

rhino850 said:   Q=elektronic;16647826]dpid said:   huh? the 1099-k starts to be reported in 2011.

http://www.irs.gov/irs/article/0,,id=215740,00.html



"In the future, this will probably make some churn activities taxable.
"

No. This is not making anything taxable that was not already taxable before. This is making people who did not report income report it and pay taxes they owe on any profits

It's been debated for a long time. Before, you didn't have to fill out a Schedule C for running cash equivalents through a payment processor. I'm not a tax professional and will wait till others chime in, but I'm fairly certain a rebate reduces the cost basis for goods sold.


godblessall9 said:   Need advice : I created a personal PayPal account for a fundraiser for a kid with critical health condition. Raised close to $30K from 500+ donors. Every penny was transferred to a new personal checking account I created and was wire transferred to the hospital's account. I have statements for each donation and transfers to bank and then to hospital. I also have hospital invoice for treatment cost etc. I volunteered to do it because it was a time-critical to raise funds and save that infants life. Now I wonder if I need to submit 1099-K and will it be treated as income. I didn't earn a penny from this and I have records to prove it. I plan to visit a CPA, but want to FW community's opinion about it.

My take would be that if you are forced to take the donations as income you would also be able to write off the other side as donations to charity. It should end up a wash.

IF you get a 1099K, if not then don't worry about it.

RedWolfe01 said:   godblessall9 said:   Need advice : I created a personal PayPal account for a fundraiser for a kid with critical health condition. Raised close to $30K from 500+ donors. Every penny was transferred to a new personal checking account I created and was wire transferred to the hospital's account. I have statements for each donation and transfers to bank and then to hospital. I also have hospital invoice for treatment cost etc. I volunteered to do it because it was a time-critical to raise funds and save that infants life. Now I wonder if I need to submit 1099-K and will it be treated as income. I didn't earn a penny from this and I have records to prove it. I plan to visit a CPA, but want to FW community's opinion about it.

My take would be that if you are forced to take the donations as income you would also be able to write off the other side as donations to charity. It should end up a wash.

IF you get a 1099K, if not then don't worry about it.


You can't deduct "charitable contributions" to an individual. What you would have to do in this situation is just not report anything and maintain records to support what actually happened in the event you are audited.

heyeaglefn said:   http://www.fatwallet.com/forums/finance/1029619/Interesting, I purposefully did a search for 1099 and it didn't come up. Maybe it's archived?

godblessall9 said:   Need advice : I created a personal PayPal account for a fundraiser for a kid with critical health condition. Raised close to $30K from 500+ donors. Every penny was transferred to a new personal checking account I created and was wire transferred to the hospital's account. I have statements for each donation and transfers to bank and then to hospital. I also have hospital invoice for treatment cost etc. I volunteered to do it because it was a time-critical to raise funds and save that infants life. Now I wonder if I need to submit 1099-K and will it be treated as income. I didn't earn a penny from this and I have records to prove it. I plan to visit a CPA, but want to FW community's opinion about it.

It's not a charitable deduction. It also doesn't qualify for the medical exclusion for gift tax, so if anyone "donated" more than the annual exclusion amount, you should notify them that they may be required to file a gift tax return. Hopefully you also made it absolutely clear when you were accepting these donations that they were not tax deductible. If people believed the gift was tax deductible, you may have an issue.

defjukie said:   I feel it's important to point out that it has to be 200+ transactions AND $20k+ in sales, not either/or.That's the threshold that requires reporting. Any processor is free to report 1 transaction for $.01, if they choose to.

Glitch99 said:   defjukie said:   I feel it's important to point out that it has to be 200+ transactions AND $20k+ in sales, not either/or.That's the threshold that requires reporting. Any processor is free to report 1 transaction for $.01, if they choose to.

Why would they go to the trouble of reporting all those transactions if the don't have to?

tbike99 said:   Glitch99 said:   defjukie said:   I feel it's important to point out that it has to be 200+ transactions AND $20k+ in sales, not either/or.That's the threshold that requires reporting. Any processor is free to report 1 transaction for $.01, if they choose to.

Why would they go to the trouble of reporting all those transactions if the don't have to?
Who knows what their motivation is. It could be a simple as clicking a print button to spit out a 1099 for all customers, rather than having to first set up a filter to isolate the ones that are required.

Why is the limit at $20000. Shouldn't you report at much less ???

The penalties for not reporting 1099's when required to are pretty severe. But who would want the overhead of reporting if not required to? It's not just a one-time filing. You have to eat the hassle of handling a bunch of inquiries about mistakes, wrong SSN, etc. I'm speaking from the perspective of the payment processor of course.

mistycoupon said:   Why is the limit at $20000. Shouldn't you report at much less ???
You should report whatever is revenue, whether it's on a 1099 or not. They're only required to report over $20k because this applies to all payment processing - and there's alot of casual users of paypal/etc that dont have tax-related transactions. Requiring a much lower amount would catch alot of these casual users, and create alot of exceptions to be flagged and reviewed. $20k/200 transactions is, for the most part, only going to "catch" business-related users. Yes, there will still be exceptions, but alot fewer than if those thresholds were lower.

forbin4040 said:   The 1099-K a new form created by the IRS for people who sell on Amazon or eBay and amass $20,000 in sales. (More specifics in link)
It's linked to Amazon Payments and Paypal specifically. but I suspect Square and others will participate.

http://cashmoneylife.com/1099-k-form-reporting-requirements/

Edit : Must be 20k AND 200+ transactions. So if you sell 1 thing for 20k don't expect a 1099-k

Edit 2: Even if you get a 1099-K for 2011, you can put 0 in line 1A. It's allowed for 2011.


Regardless of the reporting changes, if you sell items on Amazon, eBay, Craigslist or anywhere else *for a profit*, you should be reporting that net profit as business income and paying taxes on it. If the IRS suddenly gets a 1099-k for 20K+ income and you never paid taxes on the income in prior years, you can bet they'll flag you and potentially audit you even for the prior years.

And even if you sell things and make less than 20K/200 transactions, you should be reporting that income too. The IRS probably won't target the small time sellers vigorously, but if you get audited for other reasons, this is something they may notice.

In other words, pay your taxes, deadbeat =)

I'm confused....do we input the information from our 1099-k into your tax files or not?...or is this just a way to make sure everyone is being honest? Thanks for any and all help!

Yes. 1099's are just a way to keep everyone honest, same as W2G reporting.

Glitch99 said:   defjukie said:   I feel it's important to point out that it has to be 200+ transactions AND $20k+ in sales, not either/or.That's the threshold that requires reporting. Any processor is free to report 1 transaction for $.01, if they choose to.

Exactly. And just as a data point, I just received a 1099-K for $400 in transactions (off the top of my head, I'm not sure how many transactions it was, probably around 10 or so, definitely not close to 200). I was with this company for a couple weeks then left for a better one.

jetsfan92588 said:   Glitch99 said:   defjukie said:   I feel it's important to point out that it has to be 200+ transactions AND $20k+ in sales, not either/or.That's the threshold that requires reporting. Any processor is free to report 1 transaction for $.01, if they choose to.

Exactly. And just as a data point, I just received a 1099-K for $400 in transactions (off the top of my head, I'm not sure how many transactions it was, probably around 10 or so, definitely not close to 200). I was with this company for a couple weeks then left for a better one.
Sorry, I'm confused. The 1099-K is ONLY for PAYMENT PROCESSORS like PayPal or Amazon payments or AMEX Payments. Are you referring to a payment processor or a "regular" 1099-MISC for doing independent contractor work for someone? That's totally different.

It's for processing transactions with any merchant processor, not just third-party ones such as Paypal or Amazon. It's a 1099-K and was appropriately issued, I just made that statement to back up Glitch's statement that the 200/20K is just the "threshold that requires reporting" and processors may report even if you don't hit those limits.

defjukie said:   I feel it's important to point out that it has to be 200+ transactions AND $20k+ in sales, not either/orSome merchant processors will report at any level far, far below those numbers. They MUST report above 200 and $20k

Can someone please explain this statement:

There’s no way for businesses in this situation to avoid being impacted. However, there is at least one mitigating factor. The amounts reported, whether on a Paypal 1099-K, or from Amazon, or from credit card companies, won’t impact taxes due for 2011. This year is the grace period during which the government is just collecting information. That gives merchants time to find better accounting tools so that they can figure out how to affordably perform their accounting in this new environment to be ready for the following year’s taxes.

Isn't "just collecting information" exactly what a 1099 of any type is for?

MisterEd said:   Can someone please explain this statement:

There’s no way for businesses in this situation to avoid being impacted. However, there is at least one mitigating factor. The amounts reported, whether on a Paypal 1099-K, or from Amazon, or from credit card companies, won’t impact taxes due for 2011. This year is the grace period during which the government is just collecting information. That gives merchants time to find better accounting tools so that they can figure out how to affordably perform their accounting in this new environment to be ready for the following year’s taxes.

Isn't "just collecting information" exactly what a 1099 of any type is for?
It means they arent going to actively match 1099 info with tax return info, and arent going to trigger audits based on this info. They're probably using the info this year to determine what there is to gain by strictly enforcing the matter, and how much resources to dedicate to this.

I think what they should've said instead of "wont impact taxes due" is "shouldnt impact taxes due"... For anyone with legit tax returns, the only difference will be getting another piece of paper in the mail, and having to break that amount out onto a separate line on their return.

MisterEd said:   Can someone please explain this statement:

There’s no way for businesses in this situation to avoid being impacted. However, there is at least one mitigating factor. The amounts reported, whether on a Paypal 1099-K, or from Amazon, or from credit card companies, won’t impact taxes due for 2011. This year is the grace period during which the government is just collecting information. That gives merchants time to find better accounting tools so that they can figure out how to affordably perform their accounting in this new environment to be ready for the following year’s taxes.

Isn't "just collecting information" exactly what a 1099 of any type is for?
This is the first year they are requiring 1099-K's to be issued. They are going to 'let' it slide on the payee side but NOT the payor side.
Hence you don't have to report it but the companies MUST send it.

Next year both parties have to use it.

forbin4040 said:   MisterEd said:   Can someone please explain this statement:

There’s no way for businesses in this situation to avoid being impacted. However, there is at least one mitigating factor. The amounts reported, whether on a Paypal 1099-K, or from Amazon, or from credit card companies, won’t impact taxes due for 2011. This year is the grace period during which the government is just collecting information. That gives merchants time to find better accounting tools so that they can figure out how to affordably perform their accounting in this new environment to be ready for the following year’s taxes.

Isn't "just collecting information" exactly what a 1099 of any type is for?
This is the first year they are requiring 1099-K's to be issued. They are going to 'let' it slide on the payee side but NOT the payor side.
Hence you don't have to report it but the companies MUST send it.

Next year both parties have to use it.
But if the companies send it, then it IS reported to the IRS because they get a copy. Are you saying the IRS won't match the income shown on the 1099's to the income you report on your tax form?

Alcibiades said:   defjukie said:   I feel it's important to point out that it has to be 200+ transactions AND $20k+ in sales, not either/orSome merchant processors will report at any level far, far below those numbers. They MUST report above 200 and $20k

Correct. Today I received one from Intuit processor for $7000-something and less than 200 sales. I dropped them halfway through the year and haven't received one from the new processor, or from Square, who I use occasionally. I'm not concerned about receiving it as I've been reporting these sales for years.

MisterEd said:   forbin4040 said:   MisterEd said:   Can someone please explain this statement:

There’s no way for businesses in this situation to avoid being impacted. However, there is at least one mitigating factor. The amounts reported, whether on a Paypal 1099-K, or from Amazon, or from credit card companies, won’t impact taxes due for 2011. This year is the grace period during which the government is just collecting information. That gives merchants time to find better accounting tools so that they can figure out how to affordably perform their accounting in this new environment to be ready for the following year’s taxes.

Isn't "just collecting information" exactly what a 1099 of any type is for?
This is the first year they are requiring 1099-K's to be issued. They are going to 'let' it slide on the payee side but NOT the payor side.
Hence you don't have to report it but the companies MUST send it.

Next year both parties have to use it.
But if the companies send it, then it IS reported to the IRS because they get a copy. Are you saying the IRS won't match the income shown on the 1099's to the income you report on your tax form?
Correct.

ajh5408 said:   MisterEd said:   forbin4040 said:   MisterEd said:   Can someone please explain this statement:

There’s no way for businesses in this situation to avoid being impacted. However, there is at least one mitigating factor. The amounts reported, whether on a Paypal 1099-K, or from Amazon, or from credit card companies, won’t impact taxes due for 2011. This year is the grace period during which the government is just collecting information. That gives merchants time to find better accounting tools so that they can figure out how to affordably perform their accounting in this new environment to be ready for the following year’s taxes.

Isn't "just collecting information" exactly what a 1099 of any type is for?
This is the first year they are requiring 1099-K's to be issued. They are going to 'let' it slide on the payee side but NOT the payor side.
Hence you don't have to report it but the companies MUST send it.

Next year both parties have to use it.
But if the companies send it, then it IS reported to the IRS because they get a copy. Are you saying the IRS won't match the income shown on the 1099's to the income you report on your tax form?
Correct.
Which part was correct? There are 2 statements there. Hopefully the one that says "the IRS won't match the income shown on the 1099's to the income you report on your tax form."

Well, Amazon Payments is NOT issuing one for under $20K/200 transactions.

MisterEd said:   ajh5408 said:   MisterEd said:   forbin4040 said:   MisterEd said:   Can someone please explain this statement:

There’s no way for businesses in this situation to avoid being impacted. However, there is at least one mitigating factor. The amounts reported, whether on a Paypal 1099-K, or from Amazon, or from credit card companies, won’t impact taxes due for 2011. This year is the grace period during which the government is just collecting information. That gives merchants time to find better accounting tools so that they can figure out how to affordably perform their accounting in this new environment to be ready for the following year’s taxes.

Isn't "just collecting information" exactly what a 1099 of any type is for?
This is the first year they are requiring 1099-K's to be issued. They are going to 'let' it slide on the payee side but NOT the payor side.
Hence you don't have to report it but the companies MUST send it.

Next year both parties have to use it.
But if the companies send it, then it IS reported to the IRS because they get a copy. Are you saying the IRS won't match the income shown on the 1099's to the income you report on your tax form?
Correct.
Which part was correct? There are 2 statements there. Hopefully the one that says "the IRS won't match the income shown on the 1099's to the income you report on your tax form."
http://www.irs.gov/pub/irs-pdf/f1040sc.pdf
IRS said: 1a Merchant card and third party payments. For 2011, enter -0-

ajh5408 said:   MisterEd said:   ajh5408 said:   MisterEd said:   forbin4040 said:   MisterEd said:   Can someone please explain this statement:

There’s no way for businesses in this situation to avoid being impacted. However, there is at least one mitigating factor. The amounts reported, whether on a Paypal 1099-K, or from Amazon, or from credit card companies, won’t impact taxes due for 2011. This year is the grace period during which the government is just collecting information. That gives merchants time to find better accounting tools so that they can figure out how to affordably perform their accounting in this new environment to be ready for the following year’s taxes.

Isn't "just collecting information" exactly what a 1099 of any type is for?
This is the first year they are requiring 1099-K's to be issued. They are going to 'let' it slide on the payee side but NOT the payor side.
Hence you don't have to report it but the companies MUST send it.

Next year both parties have to use it.
But if the companies send it, then it IS reported to the IRS because they get a copy. Are you saying the IRS won't match the income shown on the 1099's to the income you report on your tax form?
Correct.
Which part was correct? There are 2 statements there. Hopefully the one that says "the IRS won't match the income shown on the 1099's to the income you report on your tax form."
http://www.irs.gov/pub/irs-pdf/f1040sc.pdf
IRS said: 1a Merchant card and third party payments. For 2011, enter -0-


Yes, I understand it says to "Enter Zero" but you still have to enter your income on your Schedule-C when you do your taxes. The fact that (for example) PayPal sends the IRS a copy of the 1099-K, despite the fact you don't have to enter the total off it yourself, what is to say that the IRS will not COMPARE the 1099-K amount you get from PayPal against what you report as gross business income on your Sched-C?. IRS will still have that data in their computers. Let's say PayPal sends a 1099-K to the IRS for $100,000. You show your business gross income is $50,000 on Sched-C you don't think they would question it as not comparing to what was reported to the IRS by PayPal on the 1099-K?

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mrsteelhed said:   receipts for 37kwhat does they have to do with the 1099-K ?



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