Tax news, personal finance, and more!
You have to keep track of tax deadlines, distribute your employees’ income statements, and complete your business and personal tax return all at once.
With that in mind, you may slip up and make a few tax errors. Here are some common mistakes and how to avoid them.
If you’re an Uber driver, run an Etsy shop, or rent out your home to AirBNB frequenters, then you might notice a new tax form that has found it’s way into your mailbox in recent years.
It’s nothing to stress over. This is generally a straightforward form to review, and easy to report on your tax return.
Form 1099-K, otherwise known as Payment Card and Third Party Network Transactions, is one of the more recently introduced tax forms. It was created by the IRS in order to report income received from online electronic payments (e.g. credit cards, PayPal, debit cards, etc.) through third party processors. Prior to this form, many independent contractors who used online payment methods were left confused on how to report those sales on their tax returns.
Wondering if you’re one of the lucky ones who will get a 1099-K this year? The qualifications are somewhat more specific compared to other forms such as the W-2. With a 1099-K, it is based on sales volume.
Retailers who accept online credit card payments will receive a 1099-K from any business that processed their payments. However, the 1099-K is only mandatory if online processing meets the following stipulations:
If you earned money from a side job and didn’t receive a form 1099-MISC or W-2 form, then you may think you’re off the hook from reporting it on your tax return. Think again.
The IRS requires taxpayers to report all income from any source. Even if it’s from a side job.
In fact, you’ll need to report it as self-employment income on a business tax return (Sch. C).
You might be confused and asking “I don’t have a business-Why would I file a business tax return?” According to the IRS, “All income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040.”
In other words, even if you don’t consider yourself a business owner or self-employed, if you’re 18 years or older, you’ll still need to report income earned from side work as self employment income on a Business Tax Return (even if it’s less than $600).
This includes fees received from;
