Tax Tips

Plan Your 2024 Retirement Contributions

Tip Category: What’s New

In the fourth move in three years, the IRS in late November changed the reporting requirements for Form 1099-K. So why should you care? Well pay attention if you’ve ever sold anything on Amazon or eBay, have ever sold tickets to sporting events or concerts, or received money from payment apps like Venmo.

Background

The IRS wants to track the receipt of money from third-party credit card and other payment processors. This is because much of this activity is deemed business activity AND it is under-reported. The IRS uses Form 1099-K to report these transactions and for years the threshold for reporting was $20,000 and 200 transactions per payment processor. The law was then changed to lower the threshold to $600 and any number of transactions.

Current Situation

After delaying the implementation of the $600 threshold two times in prior years, the IRS once again rolled back the reporting threshold for 2023 to $20,000 and 200 transactions. This repeated change, albeit a welcome one for many taxpayers, is also creating mass confusion as the delay was put in place a mere 45 days before the forms start hitting inboxes.

What you need to know

The income is reportable whether you receive the form or not. So if you have a side hustle on Amazon, or have a business reselling tickets, you are required to report it.

You may OR may not receive a Form 1099-K. Given the late change, you may still receive a Form 1099-K this January or February even if the payment processor is not required to report it. So if you receive a form, please keep it. The activity is still being reported to the IRS.

The limits are still coming down, so be prepared. The recent change is only temporary. The IRS will be lowering the threshold over the next few years to get to the $600 limit, so be forewarned.

How to report business activity varies. If you have a side hustle, sell or resell tickets online, or use digital payment systems to receive payment for goods or services you are in business. This needs to be reported. How it is reported can vary so call for help.

Frequently Asked Tax Questions

How long does it take to process my tax return?

Once we have ALL the taxpayer information, we can provide a complete turnaround within 1-2 weeks. Most tax returns are completed within just a few days

What is the latest date I can get info to HAS to file by April 15?

In most cases, we can complete your filing if we get all your tax documents no later than March 31. Depending on our client volume around that time, however, there may be delays for those who get their info in just under the wire, and extensions may have to be filed in some cases. 

What happens if I cannot get my information to you by March 31?

Heintzelman Accounting Services will make every effort to remind you prior to the deadline, to get your information to us in a timely manner. However, we understand that things happen, and sometimes circumstances beyond your control can prevent you from meeting the deadline. If this is the case, contact us to let us know, and we’ll file an extension for you.

What if I need to file an extension and I think I will owe taxes?

HAS will work with you to try to estimate your total income and taxes due. In addition, we will prepare the vouchers you will need to mail in with your payment and extension (additional fees apply).

Do I have to make a payment with my extension?
No. However, any taxes owed are due to the IRS by April 15 whether you have actually filed your return by that date or not. Any taxes that are not paid by April 15 are subject to late payment penalties and interest.
What if I get a tax document in the mail after I file my return?
As a rule, we prefer not to start filing returns until all tax documents have been received. We understand that forms may be corrected, filed late, or simply forgotten. If that happens contact us with the new documents as soon as possible. We will determine whether or not your return needs to be amended and file the amended return if necessary (additional fees apply).
What does HAS do with my sensitive documents once they receive them?
We work in a paperless environment. All documents we receive are secured electronically, and the originals are returned to the client.
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BLiS, LLC

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