This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Selling Online? Meet the 1099-K Tax Form

Stocks in this article: AMZN EBAY JPM

NEW YORK ( MainStreet) -- By the end of January, a few million small businesses will have a new tax reporting form in their hands called the Form 1099-K.

As part of it, payment networks such as Amazon (AMZN), eBay (EBAY) and PayPal as well as banks and credit card processors are now required to report credit card, debit card and gift card payments, among others, made to merchants for goods and services.

Payment processors must send out annual 1099-K forms to any small business that sells more than $20,000 in goods or services and has 200 payments during the year with any one payment processor, the ruling says.

The Internal Revenue Service ruling that brought the form into being was actually enacted as part of the Housing and Economic Recovery Act of 2008, then pushed back.

Outright.com CEO Steven Aldrich offered tips for small businesses on how to handle the forms.

What prompted the ruling?

Aldrich: More and more revenue was flowing electronically and the IRS has been trying to figure out where revenue is showing up that's currently not tracked. ... The next question from Congress was what about all the revenue through credit card companies and electronic commerce payment networks? That was the progenitor: "Let's go after online and offline merchant processing revenue."

But isn't that repetitive for small-business owners that are already reporting the income?

Aldrich: The small businesses that I talk to are doing their very best to be on top of how much revenue they made and report that as part of their tax filings. What this does from a compliance perspective is allow the IRS to match up tax filings with the sources of their revenue.

This is really a verification step that the IRS is putting in place. You might call it a paperwork burden that's being placed on the small business now because the government wants to ensure that they have the ability to verify the amount that the small businesses are earning. I don't think small businesses are avoiding taxes. I think this is an attempt by Congress to identify money in the system: "Let's get a check on the numbers that small businesses are sending."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs