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If You Dread the IRS Now, Wait Until You Get a 1099-K
WSJ ^ | March 31, 2022 | Ryan Ellis

Posted on 04/02/2022 11:26:17 AM PDT by george76

In the best of times, the Internal Revenue Service is tough to deal with, and tax season is never fun. But the past few years have seen the IRS lurch from one crisis to another. And things are about to get much worse for millions of taxpayers.

In 2021 Congress expanded the reporting requirements of the obscure Form 1099-K. This information-reporting form tracks business transactions done with a credit or debit card or such peer-to-peer services as Venmo and Paypal.

Prior to the change, taxpayers received a 1099-K only if they processed more than 200 business transactions, amounting to more than $20,000, in the course of a year. Congress removed the transaction threshold and lowered the payment threshold to $600.

As a result, millions of taxpayers who have never seen a Form 1099-K will be receiving them. While no one knows how many Americans will be getting these forms, tax lobbyists estimate the number at as high as 20 million.

This won’t happen until next tax season, but card processors and peer-to-peer networks are already collecting information on their customers for the IRS—an incredible breach of privacy. Congress rushed this provision into law as part of the American Rescue Plan Act of 2021, and it was never vetted in tax and accounting communities.

The biggest issue is that millions of Americans won’t see this coming. They’ve never received a 1099-K and won’t know what to do with it. While the lower reporting thresholds were meant to bring full-time Uber drivers and serial Airbnb landlords into compliance, the net was cast too wide. ... . Imagine using your Paypal account to facilitate paying for a vacation, only to get a tax form in the mail.

(Excerpt) Read more at wsj.com ...


TOPICS: Crime/Corruption; Government; News/Current Events; Politics/Elections; US: District of Columbia
KEYWORDS: 1099k; airbnb; airbnblandlords; banks; bidenmustgo; cardprocessors; creditcard; debitcard; demagogicparty; ebay; fourthamendment; gigeconomy; irs; paypal; peertopeernetworks; peertopeerservices; suetheirs; tax; taxes; taxnotices; taxpayers; uber; uberdrivers; venmo
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To: SES1066

So how does this new reporting requirement differ from the one that was killed?


21 posted on 04/02/2022 11:47:45 AM PDT by ProtectOurFreedom (“Sorry, I’m not a biologist.”)
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To: Skywise

“I don’t get this line - that’s not a business to business transaction. That’s a personal purchase.”

The payer is not the processor.


22 posted on 04/02/2022 11:48:32 AM PDT by TexasGator (UF)
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To: E. Pluribus Unum

So I sold something on ebay for $650 but bought it for $800...so there is no profit...so what do I do. And I have no income except SS...do I have to file at all?


23 posted on 04/02/2022 11:52:05 AM PDT by Sacajaweau ( )
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To: Gen.Blather
Or, is this a tax on credit card payments?

It is for those receiving the payments. Negotiate a discount for paying cash.

24 posted on 04/02/2022 11:53:05 AM PDT by PAR35
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To: Sacajaweau

Only your IRS agent knows for sure. Maybe.


25 posted on 04/02/2022 11:54:11 AM PDT by E. Pluribus Unum (Depopulate the depopulationists. --FJB)
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To: george76

cash is king


26 posted on 04/02/2022 11:55:01 AM PDT by mylife (It looks just like a telefunken U47... (===)
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To: Sacajaweau

Proper treatment is probably to report it as income of $650, and then cost of good sold as $800, and have a loss of $150 from your ebay business that would offset other income and potentially lower your tax burden. And if your income meets the criteria, you might even quaify for EIC. Consult your tax software or a qualified tax preparer. (In short, you might come out ahead by filing).


27 posted on 04/02/2022 11:58:09 AM PDT by PAR35
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To: ProtectOurFreedom

My guess is that the WSJ would at least be current on the sitch.


28 posted on 04/02/2022 12:00:35 PM PDT by 9YearLurker
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To: E. Pluribus Unum
This is if you RECEIVE more than $600 in payments from PayPal, not PURCHASE more than $600 of merchandise, right?

Probably. We buy and sell on eBay via PayPal. They have a running tally on what we received from sales, and ran up over $1000 in sales over the last couple months. They sent us a 1099-K, and then soon sent a letter telling us to ignore it and that the info was not sent to the IRS. However, this article says otherwise, that we'll be hit by the IRS next year for this year's sales over $600.

Problem is, that those "profits" are not profits, they ignore the fact that we originally paid out money for those items and invested our labor in storing, packaging and handling the sales. Any real profit margins, if any, are slim.

29 posted on 04/02/2022 12:00:43 PM PDT by roadcat
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To: george76

I do translation and get 1099s and report every one.the problem is the client that sends me the previous year’s 1099k in April.


30 posted on 04/02/2022 12:01:05 PM PDT by struggle
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To: C210N

Damn, that’s a good one!


31 posted on 04/02/2022 12:01:40 PM PDT by Starboard
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To: Restless
For clarification, here’s what TurboTax says about form 1099-K: “This form endeavors to ensure that all online retailers are reporting sales for tax purposes. It requires credit card companies, such as MasterCard and Visa, and third-party processors, such as PayPal and Amazon, to report the payment transactions they process on behalf of retailers.”

I guess that's why I have to pay sales tax on internet purchase even though I am tax exempt locally and my state has no direct taxes.

32 posted on 04/02/2022 12:01:52 PM PDT by Chuckster (Friends don't let friends eat farmed fish)
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To: PAR35

Unless one is already filing Sched C don’t report it.


33 posted on 04/02/2022 12:02:53 PM PDT by TexasGator (UF)
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To: roadcat

Thanks for answering.

As an aside, feral government spending is completely decoupled from tax revenue.

They spend whatever they want regardless of tax revenue.

The only purposes of taxes appears to be punishment of the people they hate.


34 posted on 04/02/2022 12:03:49 PM PDT by E. Pluribus Unum (Depopulate the depopulationists. --FJB)
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To: PAR35

I’m not a business. Filing won’t change a thing.


35 posted on 04/02/2022 12:03:51 PM PDT by Sacajaweau ( )
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To: C210N

So, since you are a Sovereign Citizen, have you stopped paying taxes?


36 posted on 04/02/2022 12:10:11 PM PDT by E. Pluribus Unum (Depopulate the depopulationists. --FJB)
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To: george76

I’m trying to come up with one out of a myriad of my transactions with Amazon that has netted me any profit. I wonder if we declare all our transactions as the start of a business venture, will we still have a few years to become profitable while writing off all this crap.


37 posted on 04/02/2022 12:10:52 PM PDT by Starstruck ( Living life, Binge watching re-runs of actual history.)
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To: ProtectOurFreedom
So how does this new reporting requirement differ from the one that was killed?

The 1099K is a newer form that is now expanded for reporting on "Gig Economy" type operations (Lyft/Uber/DoorDash etc). It, AT THIS TIME, is not a document that a wage-earner or retiree would be getting. Then again, in tax history, there have been many operations that grew like Topsie!

38 posted on 04/02/2022 12:19:36 PM PDT by SES1066 (More & more it looks like Brandon's best decision was Kamala! UGH!)
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To: E. Pluribus Unum
I am not a Sovereign Citizen. I'd like to become one, though.

Sovereign Citizens are citizens of their state. We, as a People, stopped being Sovereign Citizens of our several states by the 14th amendment, and became instead citizens of the United States. Might as well called it the United State, singular.

Amendment XIV

Section 1. All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States...

39 posted on 04/02/2022 12:20:08 PM PDT by C210N (Everything will be okay in the end. If it’s not okay, it’s not the end.)
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To: PAR35

Thank you.


40 posted on 04/02/2022 12:21:03 PM PDT by Gen.Blather (Wait! I said that out loud. Sorry.)
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