|Do you accept credit cards? You may be receiving
a 1099-K this year.
If you're a business owner who accepts credit cards or PayPal at your studio, you might have received (or soon will) a new document for your taxes this year, the 1099-K.
You may be asking yourself, "why am I getting this and what the heck do I do with it?" while subconsciously rubbing your temples from the tax headache that's starting to form.
Don't fret! It's actually not a big deal! (Unlike the Dance Buzz, who is most definitely a big deal… I'm going to pull on my tax smarty-pants and see if I can shed some light on what is up with 1099-Ks)
WHY DID I GET A 1099-K?
A new law was passed that requires businesses who process payments (like PayPal or your credit card merchant) to report the amount of sales they processed and for whom it was processed (you). They filed a 1099-K to the IRS reporting the sales they processed for your business. That means that the government knows how much sales you did through credit cards. And you will report this amount on your tax return as part of your gross sales.
It is a way for the government to make sure everyone is playing fair and reporting all of their sales. In my opinion, I think it is in result of the major growth of online businesses. This new law will help the IRS ensure that people who do a lot of business online are reporting their sales. In the past, the IRS had no way of knowing how much income you received from credit card sales, which is an online business' primary method of receiving income. Ok, I'm off my soapbox now. Back to the subject at hand.
|Did you receive a 1099-K for your studio?|
I ACCEPT CREDIT CARDS BUT DIDN'T GET A 1099-K. WHAA?
You might actually not have to worry about it – you will only receive one if you had more than 200 transactions this year and more than $20,000 in gross sales.
If you do your own taxes, you are going to use this number to breakdown your sales income.
I STILL DON'T UNDERSTAND, SHOW ME AN EXAMPLE
Read more »