The change isn’t intended to affect individuals who receive payments as gifts or reimbursements from friends after sharing the associated fee of a restaurant meal, said Erin Collins, a national taxpayer advocate who heads an agency on the IRS that helps taxpayers. But some could mistakenly they get the forms anyway – say in the event that they get payments mislabeled as business transactions somewhat than “family and friends” payments, she said.
“The change will cause confusion,” Ms Collins said.
Mr. Walters of Blucor said he could also be one in every of the taxpayers receiving the 1099-K. He said he likes going to concert events, but sometimes his plans change. “If I am unable to come to the concert,” he said, he sells tickets further StubHubwhich is one in every of the web marketplaces that notified users of the brand new rules.
Here are some questions and answers concerning the latest 1099-K rules:
What can I do to organize for next 12 months’s tax season?
Ms Collins said if you happen to use payment apps, remind those sending you personal payments to mark transactions as such and note what the payment was for. Venmo and his parent PayPal, allow users to mark transactions as personal or for purchases. Payments are marked “family and friends” by default when money is transferred between two consumer accounts, but users can select the “goods and services” button when making a purchase order. Only payments sent with the activate are marked as goods and services for the recipient.
Cash application states on its website that users with standard personal accounts won’t receive forms and that only users of business accounts can have transactions reported to the IRS
Sellers should collect receipts or other documents that show the unique cost of the items they sold, Walters said. The tax law does has established cooperation With eBay to assist users understand the brand new requirements.
If you get your 1099-K in January, don’t ignore it, said Tom O’Saben, director of tax content and government relations on the National Association of Tax Professionals. If you think it is a mistake, you’ll be able to ask for rectification, but this takes time and should delay your return.
Accountants say that if an amount isn’t taxable, it often doesn’t must be reported on a tax return. But be certain that you’ve got documents to prove it, Mr. O’Saben said, because you may get a letter from the IRS asking for documentation.