Thursday, December 17, 2015

Form 1099-K taxable in 1040?

Form 1099-K taxable in 1040?:

Before we come to conclusion as to tax ability of amount given in 1099K we must know what is 1099-k?

The IRS uses third-party information reporting on forms in the 1099 series to increase voluntary compliance and improve collections. Beginning in 2011, legislation requires reporting of income in two areas: payment card (credit, debit and certain electronic transactions) and securities basis reporting.

Separate reporting of these transactions is not required. However, you should follow the return instructions on the form you are completing to report your gross receipts or sales. You should report items that qualify as a trade or business expense on the appropriate line item of Schedules C, E and F.

As a preparer if you have received 1099K don't be panic and start entering but check if the Taxpayer has schedule C,E,F income and the amount shown matches to gross receipts.