Wednesday, February 08, 2012

Taxes, taxes, taxes

If you think you're paying enough taxes now, just wait. The IRS has been trying to figure out a way to collect taxes for on-line sales. They're going after the former safe havens for tax cheats who sell on line. Amazon, eBay®, PayPal™ and others are going to help the IRS along with credit card companies. Services will be a natural target.

A new tax form, called the 1099 K, will be sent out this spring. It documents transactions processed for sellers with more than 200 transactions and/or $20,000 in annual gross receipts. The IRS will compare the gross sales reported on the 1099 K and match it with the total gross receipts reported on an individual’s Schedule C tax form.

They're planning to send out more than 50 million of these 1099-Ks, so you'd better keep good records. The form doesn't take refunds, credits, returns or other adjustments into consideration. It just looks at the gross amount of the sale.

Talk to your CPA about this if you use any of these on-line services. You could wind up paying more than your really owe in taxes.

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