Paypal's new tax policies
Jan 28, 2022 17:25:27 #
wrangler5
Loc: Missouri
Note that a Form 1099-K does not give the IRS information that their computeers can compare to a line on your return and send an assessment notice if they see a difference. This is unlike, say, a 1099-INT or 1099-DIV, where your return had better show at least as much of that kind of income as the IRS computers know you got or you'll get a letter.
Payments reflected on a 1099-K might properly go on any number of tax return lines, or not go on a return at all. (For example, sales taxes collected do not legally belong to a seller and do not appear on a federal income tax return, nor are they any kind of "income" for accounting purposes.) So all that an IRS computer can look for is whether there's something on your return that might include at least a good portion of what's on the 1099-K. Or not.
It remains to be seen whether the IRS will really be happy there are now tens (hundreds?) of thousands of taxpayers who know they need do something with that $605 to a few $K number from a 1099-K. There may be a few real businesses that were making under $20K, or over $20K but with under 200 customers, and they'll have to step up and start reporting income if they weren't already.
But for a whole bunch of attic-cleaners or other occasional camera/lens sellers, the prudent thing may prove to be filling out a Schedule D with the 1099-K number for amount received and a best estimate of the cost of the things sold. Add in the PayPal and ebay fees and come up with a net loss of a third to a half of the amount on the 1099-K. (A capital loss reduces taxable income but is not an itemized deduction - you can still take your other itemized deductions or a standard deduction, whichever is better.)
The IRS doesn't have enough agents to audit returns of businesses the size of General Motors, let alone the returns of thousands upon thousands of individual taxpayers reporting losses on capital t***sactions that the IRS knows they participated in. Apart from the nuisance of preparing the form, it might prove to be a boon to some/many taxpayers to "have to" put a few hundred to a few thousand dollars of loss on their return and pay a few dollars less in tax.
Payments reflected on a 1099-K might properly go on any number of tax return lines, or not go on a return at all. (For example, sales taxes collected do not legally belong to a seller and do not appear on a federal income tax return, nor are they any kind of "income" for accounting purposes.) So all that an IRS computer can look for is whether there's something on your return that might include at least a good portion of what's on the 1099-K. Or not.
It remains to be seen whether the IRS will really be happy there are now tens (hundreds?) of thousands of taxpayers who know they need do something with that $605 to a few $K number from a 1099-K. There may be a few real businesses that were making under $20K, or over $20K but with under 200 customers, and they'll have to step up and start reporting income if they weren't already.
But for a whole bunch of attic-cleaners or other occasional camera/lens sellers, the prudent thing may prove to be filling out a Schedule D with the 1099-K number for amount received and a best estimate of the cost of the things sold. Add in the PayPal and ebay fees and come up with a net loss of a third to a half of the amount on the 1099-K. (A capital loss reduces taxable income but is not an itemized deduction - you can still take your other itemized deductions or a standard deduction, whichever is better.)
The IRS doesn't have enough agents to audit returns of businesses the size of General Motors, let alone the returns of thousands upon thousands of individual taxpayers reporting losses on capital t***sactions that the IRS knows they participated in. Apart from the nuisance of preparing the form, it might prove to be a boon to some/many taxpayers to "have to" put a few hundred to a few thousand dollars of loss on their return and pay a few dollars less in tax.
Jan 28, 2022 17:39:59 #
DennyT wrote:
Thank you- I may be wrong -but think only a handful of states have inheritance taxes. It is certainly not the reason there are fewer farms.
Hope wilpharm reads you post
Thanks again
Hope wilpharm reads you post
Thanks again
duh...12 million is not a huge farm..hope YOU understand that
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