Part Time Picker will officially launch with regular content on February 29th, 2012. In the meanwhile, I'll be publishing a few random posts while I tweak the design. Please feel free to leave your opinions as a comment regarding this post specifically or the blog in general.
This found photo may or may not feature actual IRS agents celebrating all the additional tax revenue they are about to recieve.
That's right. The IRS is going to monitor all the transactions from Paypal, Amazon Payments, Google Checkout, and other third party online payment networks. Well, not all transactions.
For a seller to qualify for a 1099-K for 2011, he or she needs to have made $20,000 or more through online payments and have made 200 or more transactions.
Apparently, you must meet these standards from a single merchant network to be reported, not combined from several online merchant sources. Still, this new filing requirement will affect millions of small businesses that sell online.
Keep in mind, you are required to report all of your online selling income regardless of whether you meet the 1099-K minimums or not. This new form just requires the "third party networks" (aka Paypal) to report sellers meeting these requirements to the IRS.
It is also up to you to provide the evidence of your expenses (original product costs, shipping, fees, sales tax, other business expenses, etc.) that need to be deducted from you 1099-K gross income totals. So always keep good records and receipts.
The 1099-K doesn't replace your 1099-Misc, so if you qualify, you will be getting both by the end of January 2012.
Handling your business and tax preparation professionally can save you a lot of stress, headaches, and money down the road. Things can get particularly complicated when you introduce a home-office into the mix. Consult a tax professional to maximize your tax planning.
Here is a link to the official 1099-K Form instructions from the IRS. Good luck with it.
There is also a well written article about the 1099-K from Patti Spencer here.
And then check out this article from TheStreet.com featuring an interview with Outright.com CEO Steven Aldrich. There is also a video to keep you interested.