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Starting in January 2012, businesses that accept credit and debit cards when making sales to customers will receive IRS Form 1099-K from their credit card processing company. The 1099-K will report the total payment transactions for each tax year after 2010. The new reporting requirement is part of on-going government efforts to increase collection of income tax.
Form 1099-K was created as part of the Housing and Economic Recovery Act of 2008 to increase compliance in reporting sales income by merchants. Because the IRS also gets a copy of the form, it will help the agency to determine whether or not business owners are reporting correct sales figures on their tax returns.
Not only must banks and credit card processing companies comply with the new reporting requirement, third-party networks such as PayPal and eBay, Inc. must also report total credit card transactions to their business customers who use their services to process online sales.
Not every merchant will receive a Form 1099-K. Only those merchants who generated both a minimum of 200 transactions and $20,000 or more in sales will receive the form. Casual sellers should keep in mind that even though they may not receive a 1099-K, their sales income is subject to income tax and must be reported on their tax return.
Knowing whether your online "garage sale" qualifies as a business in the eyes of the IRS can be tricky so please make sure you contact this office should you have any confusion about what is taxable and what is not. We’re here to help.
Many taxpayers spend time during the summer months updating their résumé and attending career fairs.
Here are seven things this office wants you to know about deducting costs related to your job search.
1. To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.
2. You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income, up to the amount of your tax benefit in the earlier year.
3. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.
4. If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily
personal or is primarily to look for a new job.
5. You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
6. You cannot deduct job search expenses if you are looking for a job for the first time.
7. The amount of job search expenses that you can claim on your tax return is limited. You can claim the amount that is more than 2 percent of your adjusted gross income. You figure your deduction on Schedule A.
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Clermont, FL 34711
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