new 1099-K rules

[birdman42]

Originally Posted by G1911

Tons of people are going to get fleeced by the state, they’ll get their tax bill and pay it without going through all the hoops to show some of it isn’t profit and isn’t taxed. Suckers will get ripped off by the state and everyone else will have to jump through hoops, even if technically nothing is changing in what you truly owe on your taxes.

I respectfully and strongly disagree. If your tax preparation is done by a competent person--which could be you--then you'll know to subtract your basis and expenses from your revenue. And you won't get a "bill" based on your 1099-K as long as it shows up on your tax return.

Where you will get a "bill" is 18 months after filing if you haven't reported the form. Then you'll get a Letter CP2000 from the IRS saying that they see this item as being reported to them, but it isn't on your return. Based on the information they have available to them (the money in only, not your basis or expenses) they will propose an adjustment to your tax amount. I've seen enough of these CP2000s to know that it's much easier to report everything on the original return than it is to get things straight afterward. If you report it properly, then you won't get any pushback. But if you're responding to the letter, the IRS will want to see documentation.

This coming tax season's gonna be a beast, and next year's even worse.

Bill