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The 5 Ws of a 1099-K

Don’t let your 1099-K stand in the way of business.

If you’re an Uber driver, run an Etsy shop, or rent out your home to AirBNB frequenters, then you might notice a new tax form that has found it’s way into your mailbox in recent years.

It’s nothing to stress over. This is generally a straightforward form to review, and easy to report on your tax return.

What is a 1099-K?

Form 1099-K, otherwise known as Payment Card and Third Party Network Transactions, is one of the more recently introduced tax forms. It was created by the IRS in order to report income received from online electronic payments (e.g. credit cards, PayPal, debit cards, etc.) through third party processors. Prior to this form, many independent contractors who used online payment methods were left confused on how to report those sales on their tax returns.

Who gets a 1099-K?

Wondering if you’re one of the lucky ones who will get a 1099-K this year? The qualifications are somewhat more specific compared to other forms such as the W-2. With a 1099-K, it is based on sales volume.

Retailers who accept online credit card payments will receive a 1099-K from any business that processed their payments. However, the 1099-K is only mandatory if online processing meets the following stipulations:

  1. Sales volume is over $600 per year via credit card companies.
  2. Sales volume is over $20,000 and more than 200 individual transactions were made via third party processors.

Continue reading “The 5 Ws of a 1099-K”

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Prepare a Business Tax Return with RapidTax

Let RapidTax help you and your business this year!

Starting this year, RapidTax is offering online business tax return preparation and e-filing. We’ll now be able to further assist existing customers who already use our website to prepare their individual returns. We’ll also be able to welcome new customers with businesses who need to file a tax return. Below are a few questions that you’ll want answered before preparing your business tax return with RapidTax.

What type of businesses can use RapidTax Business preparation?

Your business entity is determined when you register your business with the state you are located in. Our team at RapidTax welcomes four main business entities when it comes to preparing and e-filing business returns. These include the following:

  • Single Member LLCs
  • Partnerships
  • S-corporations
  • C-corporations

If you do not fall under one of these business entities or you’re unsure of what type of business you have, feel free to give our tax team a call at 844-CORPTAX (267-7829) to help you out. Continue reading “Prepare a Business Tax Return with RapidTax”

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Holiday Tax Deductions: Business Gifts

Tis the season of Secret Santas and Holiday Company Parties.

It’s a common tradition among businesses to get in the holiday spirit and give gifts to clients and employees. Even though giving gifts doesn’t typically put the idea of taxes in mind, it’s important to know how to report business gifts as tax deductions.

What are direct gifts versus indirect gifts?

The IRS will give the green light on a tax deduction for two types of gifts; direct and indirect. Don’t worry – this still gives you substantial leeway to choose that perfect gift this year. Direct gifts are given as part of a direct professional relationship. For example, the owner of 123, LLC gifts a Godiva gift basket to each employee for the holidays. Indirect gifts typically involve a middleman, such as sending a gift home for your employee’s child.

Is there a cost limit?

There is a $25 limit per gift, per year. What’s that mean? Well, let’s say that your company likes to give gifts to clients or employees multiple times per year. The deduction would only apply to ONE gift and only $25 of that gift could be deducted.

Keep in mind that the gift CAN cost more but only $25 of the total can be reported as a deduction (so hold onto that ‘#1 BOSS’ title and keep giving your employees those iPad minis).  

Does the cost include incidentals?

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