Members RSBro Posted December 16, 2009 Members Share Posted December 16, 2009 Just read this today on a tax update: 1099 reporting on payments made to merchants starts for tax year 2011,... Third-party networks such as PayPal will have to give 1099's to payees with over 200 sales transactions and more than $20,000 in total sales annually. IRS will match these reports against payees' income tax returns to see if any income is being underreported. Granted not everyone will come close or hit the $20k mark, but still one more big fish they roped in to help them with their matching system. And once they have compliance by 2011 I'm sure it'll eek down a bit every year or few years. Link to comment Share on other sites More sharing options...
Members lug Posted December 16, 2009 Members Share Posted December 16, 2009 One of the best things the government ever did was not tax the crap out of sales on the internet. Looks like that's about to change. Link to comment Share on other sites More sharing options...
Members RSBro Posted December 16, 2009 Author Members Share Posted December 16, 2009 One of the best things the government ever did was not tax the crap out of sales on the internet. Looks like that's about to change. I think it's a back-door attack to doing things online. Since so many of these sales are done personally and nothing is reported to the IRS, they have to audit you and actually check your account to see what you're bringing in. So, "technically" these have always been taxable- now they're going to make you get honest about what you buy and sell, and if you're like me, could/will be a depreciation and hobby activity nightmare. Link to comment Share on other sites More sharing options...
Moderators ThudMaker Posted December 16, 2009 Moderators Share Posted December 16, 2009 One of the best things the government ever did was not tax the crap out of sales on the internet. Looks like that's about to change.It's the media's fault. Link to comment Share on other sites More sharing options...
Moderators Kindness Posted December 16, 2009 Moderators Share Posted December 16, 2009 Improving honesty and accountability sounds great to me. Link to comment Share on other sites More sharing options...
Members Zamfir Posted December 16, 2009 Members Share Posted December 16, 2009 Improving honesty and accountability sounds great to me. +1. If Paypal's getting big enough to act like a quasi-bank or quasi-investment paying dividends, it should be treated like one. Income is income. Link to comment Share on other sites More sharing options...
Members RSBro Posted December 16, 2009 Author Members Share Posted December 16, 2009 +1. If Paypal's getting big enough to act like a quasi-bank or quasi-investment paying dividends, it should be treated like one. Income is income. Except when it isn't... Link to comment Share on other sites More sharing options...
Members Mudbass Posted December 16, 2009 Members Share Posted December 16, 2009 One of the best things the government ever did was not tax the crap out of sales on the internet. Looks like that's about to change. I don't think it involves taxing internet sales, not yet anyway. I think it targets internet income and income has been taxable since like the first world war or so. Link to comment Share on other sites More sharing options...
Members RSBro Posted December 16, 2009 Author Members Share Posted December 16, 2009 I don't think it involves taxing internet sales, not yet anyway. I think it targets internet income and income has been taxable since like the first world war or so. This currently will only apply to a very small portion of weekend warriors like us, but I think it will cause some issues for those (of us) who don't keep up a good record of what you buy and sell... Esp if you move a lot of instruments during the year, it can add up quickly. Link to comment Share on other sites More sharing options...
Members Zamfir Posted December 16, 2009 Members Share Posted December 16, 2009 Except when it isn't... Fine, demonstrate the exception. Which means the "income" should be documented and the corresponding law/reg should be close at hand to back up the exception. Documenting for the client and for company shareholders is a good thing. If I gotta pay tax on my bank interest and sales of goods, so should Paypal users. Link to comment Share on other sites More sharing options...
Members bassplayer7770 Posted December 16, 2009 Members Share Posted December 16, 2009 Esp if you move a lot of instruments during the year, it can add up quickly. I can see why you're worried... :poke: Link to comment Share on other sites More sharing options...
Members RSBro Posted December 16, 2009 Author Members Share Posted December 16, 2009 Fine, demonstrate the exception. Which means the "income" should be documented and the corresponding law/reg should be close at hand to back up the exception. Documenting for the client and for company shareholders is a good thing.If I gotta pay tax on my bank interest and sales of goods, so should Paypal users. The "everything that comes in is income" is the erroneous approach entry-level TCO's or field agents take. I mean, if you wanted to treat it all as ordinary income and say report it on Line 21 they'd love that, but say if you buy then sold or traded an instrument, that's not ordinary income and would be classed as a gain/loss on the sale of business property. If you were running your gigging operation that way, anyway... And I didn't say I disagreed- I just thought it was an interesting update that they specifically targeted them. Of course it's not surprising in the least. Link to comment Share on other sites More sharing options...
Members RSBro Posted December 16, 2009 Author Members Share Posted December 16, 2009 I can see why you're worried... :poke: Haha I was probably close to that in 2008... I've been pretty consistent this year. Link to comment Share on other sites More sharing options...
Members RSBro Posted December 16, 2009 Author Members Share Posted December 16, 2009 Also, again this is just another update, but the Tax Court (forget which circuit) just ruled that you don't have to start depreciating an item if it's not ready for use yet. I just mention because it was over a guy building a studio, and he'd been buying racks and loads of gear over the course of two years, and they challenged him on depreciating the items when they were in service (which is correct) vs. when he bought them. The taxpayer won. So anyone who's in this boat and you don't have income you need offset immediately this is great news and you don't in fact have to start depreciating an item upon time of purchase, as was commonly thought before. TC Summ. Op. 2009-171 is reference. Link to comment Share on other sites More sharing options...
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