The change will not be meant to use to people who find themselves receiving payments as gifts or as reimbursements from friends after splitting the associated fee of a restaurant meal, said Erin Collins, the national taxpayer advocate, who heads an agency inside the I.R.S. that assists taxpayers. But some people could mistakenly receive forms anyway — say, in the event that they get payments mislabeled as business transactions moderately than “family and friends” payments, she said.
“The change goes to cause confusion,” Ms. Collins said.
Mr. Walters of Blucora said he is likely to be amongst taxpayers receiving a 1099-K. He likes to attend concert events, he said, but sometimes his plans change. “If I can’t make it to the concert,” he said, he sells the tickets on StubHub, which is amongst the web marketplaces which have alerted users to the brand new rules.
Listed 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?
In the event you use payment apps, Ms. Collins said, remind those sending you personal payments to designate transactions as such, and make an observation of what the payment was for. Venmo and its parent, PayPal, allow users to designate transactions as personal or for purchases. Payments are tagged “family and friends” by default when money is shipped between two consumer accounts, the corporate says, but users can select the “goods and services” button when making a purchase order. Only payments sent with the toggle on are tagged as goods and services for the recipient.
Money App says on its website that users with standard, personal accounts won’t receive the forms and that only users with business accounts may have transactions reported to the I.R.S.
Sellers should gather receipts or other documents that show the unique cost of things they’ve sold, Mr. Walters said. TaxAct has teamed up with eBay to assist users understand the brand new requirements.
In the event you do get a 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. In the event you think it’s in error, you possibly can request a correction, though that takes time and will delay you in filing a return.
If the quantity isn’t taxable, you generally don’t need to report it in your return, accountants say. But be certain you might have records to prove that, Mr. O’Saben said, because it’s possible you’ll get a letter from the I.R.S. asking for documentation.