Friday, February 22, 2013

Form 1099-K: New IRS Information Return


If you started a business in 2012, you might want to know about Form 1099-K, because the IRS introduced the form in 2011. The 1099-K form reports third party network transactions, including payment card receipts, checks, credit card payments, and cash payments. The information you record on your 1099-K needs to mirror your income tax return.

What to Report?
Business owners need to report, both annual and monthly, the gross amount of reportable payment transactions for each payee, including their name, address, and taxpayer identification number.


What Will the 1099-K Achieve?
The IRS brought in this new form to increase tax compliance among businesses and individuals, and assist in obtaining information from third parties. The information on Form 1099-K helps the IRS to determine any income under-reporting, which is the most common tax fraud scheme.

When the IRS Spots Inaccuracies
If the IRS spots inaccuracies between what a taxpayer's Form 1099-K and their income tax return, it will send a notice. The most common inaccuracy is related to under-reported gross receipts. It is strongly encouraged that taxpayers check the figures on the IRS notice, their income tax return, the 1099-K form, and all payment/merchant cards and third party transactions. If there is under-reporting, hire a tax professional to resolve the issue.

3 comments:

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welyam jomesh said...

1099-K form is a way to report the income to IRS that is made through online way. For this 1099-k form is filed. To fill this form with efficient way and without any mistake 1099 software is required. There are numerous
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. It fulfill every need that is required to file the 1099 tax form.

Jill said...

Great article. Thanks for the info, it’s easy to understand. BTW, if anyone needs to fill out an IRS form 1099-K, I found a blank form here http://goo.gl/m11e2F. This site also has some tutorials on how to fill it out and a few related tax documents.




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