Bingo! The new 1099-K forms \u2014 just
\none of a number of tax-form changes this year \u2014 caught a PayPal seller.
\nThis young man, selling things from his home, did not think of himself as being
\nin business, but he just received a Form 1099-K. It doesn\u2019t take into account
\nany of his charge-backs or refunds. This is exactly the kind of person they had
\nin mind when they created the 1099-Ks.<\/p>\n
The 1099-Ks are one of many new forms aimed at helping the IRS collect more
\nmoney without raising taxes. This form is issued to eBay sellers and folks who
\nsell things and get paid by PayPal, Visa, MasterCard, American Express,
\nDiscover, etc. To get caught by this form, you must have had over $20,000 in
\nsales or over 200 transactions. The casual eBay garage-sale-type seller
\nwouldn\u2019t get one of these 1099-Ks.<\/p>\n
For decades, the IRS made only minor changes to tax forms. Generally, they
\nsimply reflected tax rates, limits or percentage changes effective that year.
\nBut this year, there are important changes to the way you report information \u2014
\nand additional information the IRS wants to see.<\/p>\n
What other new forms or changes will be affecting you?<\/p>\n
Schedule C<\/strong> If you have other income that was not paid to you via credit cards or online A similar line has been added to business returns. However, according to Lynn Another line was added for statutory employees . They are a special category of Schedule D<\/strong> This new form is designed to reconcile the information reported on the Form The new 1099-Bs are required to include the basis of the securities that were [Also see: Best Free Smartphones for Each Carrier<\/a>]<\/p>\n There are three boxes at the top of the first page of the form, related to The good news is, there is now a way to report the sale of personal residences Codes! Yes, this new form requires you to enter a variety of codes. You will You may have noticed that the financial institutions sent out letters saying Schedule E<\/strong> Form 8938<\/a>\u00a0is the Statement of Specified Foreign Financial Assets. You\u2019re familiar with This new form goes beyond the FBAR requirements. The Form 8938 requires Who is affected? – Unmarried or married filing separately: Assets of $50,000 or more at year-end – Married filing jointly: Assets of $100,000 or more at year-end and over Bona fide residents abroad, or presence for 330 days in 12 months:<\/p>\n – Married filing jointly: Assets of $400,000 or more at year-end and over – Not filing joint return: Assets of $200,000 or more at year-end and over If no income tax return needs to be filed, no need to file Form 8938.<\/p>\n
\nOn Schedule C<\/a>\u00a0, the IRS has added a new line where you report the income shown on the new
\n1099-Ks. Read more about the new forms on this IRS page<\/a>.<\/p>\n
\npayment systems, be sure to report the rest of the income on the next line.
\nRemember, if you had refunds or charge-backs report those as returns and
\nallowances.<\/p>\n
\nFreer, enrolled agent, of Spidell Publishing Inc., the IRS decided that
\nbusinesses will not be required to reconcile their gross receipts with merchant
\ncard transactions reported on Form 1099-K on their 2012 or later returns.<\/p>\n
\nworkers whose W-2s have the \u201cstatutory employees\u201d box checked. These folks get
\nW-2s, but all their wage income and related expenses are reported on Schedule
\nC. Since the Social Security and Medicare withholding have already been taken
\non the W-2, these Schedule C profits are not subject to self-employment taxes.<\/p>\n
\nThe changes to Schedule D<\/a> are of major importance to investors. Schedule D is now
\nsimply a summary of data coming from a brand new form, Form 8949<\/a>
\n, \u201cSales and Other Dispositions of Capital Assets.\u201d<\/p>\n
\n1099-Bs. Read: Investors, prepare
\nfor tax headache on cost basis<\/a>.<\/p>\n
\nsold. Sometimes, they don\u2019t include everything, or the basis is wrong.
\nInvestors may have to file as many as six copies of Form 8949 with their tax
\nreturns if they get many 1099s for sales of securities.<\/p>\n
\nshort-term capital gains. Another three are on top of the second page, for
\nlong-term capital gains. Since you may only check one box on the form, you must
\nuse a separate Form 8949 for short- and long-term gains; for brokerage reports
\nwith and without the basis reported; and for those reports that don\u2019t quite fit
\ninto either category. For instance, where some items sold show a basis and some
\ndo not.<\/p>\n
\nagain. The IRS eliminated the \u201csale of personal residence\u201d form many years ago,
\nbut still chased after people who didn\u2019t report the sale. Now you can report
\nthe sale on Form 8949 and use a code H to avoid paying tax on the sale.<\/p>\n
\nfind a list of codes on page 10 of the Schedule D\/Form 8949 instructions<\/a>.<\/p>\n
\nthat the 1099s will be late. They are hoping to only send out one version this
\nyear. It will take a year or two before this reporting goes smoothly. For now,
\nprepare to be frustrated.<\/p>\n
\nSchedule E<\/a>\u00a0is titled \u201cSupplemental Income and Loss.\u201d The IRS has added some new fields
\nrequiring taxpayers to report the number of personal-use days and business-use
\ndays for each mixed-use rental property. That\u2019s going to be a lot of fun to
\nreport, since most people never really keep track. The tax code has always
\nrequired the tracking. These new fields just put the data right up front.<\/p>\n
\nall the hoopla over the unreported overseas bank accounts. IRS exerted such
\npowerful muscle these last few years that they have even been able to get
\ninformation from the Swiss banks. Taxpayers must already report any overseas
\nfinancial account with $10,000 or more<\/a> to the U.S. Treasury each year on Form TD-F 90-22.1<\/a>, or Report of Foreign Bank and Financial Accounts , known
\nas the FBAR. Failure to report the existence of these accounts can result in
\npenalties high enough to wipe out the accounts. Read: Watchdog chides IRS
\non offshore amnesty program<\/a>.<\/p>\n
\nAmerican taxpayers in the U.S. and overseas to report their foreign assets,
\nincluding real estate, trusts and businesses. The penalty for not filing this
\nnew form is $10,000. Read: Tax mines that could blow up your return.<\/p>\n
\nTaxpayers living in the U.S., American Samoa, Puerto Rico:<\/p>\n
\nand over $100,000 throughout the year.<\/p>\n
\n$200,000 throughout the year.<\/p>\n
\n$600,000 throughout the year.<\/p>\n
\n$400,000 throughout the year.<\/p>\n