new 1099-K rules

[Johnny630]

Paying taxes it’s a good problem to have it usually means you’ve done well on your cards :-) accept it and pay it. Don’t get wrapped up in trying to avoid taxes.

[cammb]

Originally Posted by johnny630

paying taxes it’s a good problem to have it usually means you’ve done well on your cards :-) accept it and pay it. Don’t get wrapped up in trying to avoid taxes.

wtf????

[birdman42]

Quote:
Originally Posted by johnny630
paying taxes it’s a good problem to have it usually means you’ve done well on your cards :-) accept it and pay it. Don’t get wrapped up in trying to avoid taxes.

Originally Posted by cammb

wtf????

Tomato, tomahto.
Avoiding taxes--> perfectly legal, and encouraged (in some cases, even required)
Evading taxes--> criminal activity

Keep track of your costs, and report everything completely. Be a Boy Scout.

Not to play the scare card, but the conventional view is that you need to keep tax records for three years. That's how long the IRS has to begin an examination, But if they see a continuing pattern, they can go back farther--almost certainly farther than you've kept records.

I know there are quite a few people on this forum who are thinking, "Criminal? Whatchu talkin' 'bout, Willis?" The question is, how big a fish are they going to have to catch for you to get religion? The IRS knows that if they catch a whale everyone from the sharks down to the minnows is paying attention.

Full disclosure, my status as an enrolled agent, and so my livelihood, depends on being squeaky clean with my taxes. I even report the cash tips I get as a volunteer bartender at my local town theater.

Bill

[BobC]

Originally Posted by birdman42

Quote:
Originally Posted by johnny630
paying taxes it’s a good problem to have it usually means you’ve done well on your cards :-) accept it and pay it. Don’t get wrapped up in trying to avoid taxes.



Tomato, tomahto.
Avoiding taxes--> perfectly legal, and encouraged (in some cases, even required)
Evading taxes--> criminal activity

Keep track of your costs, and report everything completely. Be a Boy Scout.

Not to play the scare card, but the conventional view is that you need to keep tax records for three years. That's how long the IRS has to begin an examination, But if they see a continuing pattern, they can go back farther--almost certainly farther than you've kept records.

I know there are quite a few people on this forum who are thinking, "Criminal? Whatchu talkin' 'bout, Willis?" The question is, how big a fish are they going to have to catch for you to get religion? The IRS knows that if they catch a whale everyone from the sharks down to the minnows is paying attention.

Full disclosure, my status as an enrolled agent, and so my livelihood, depends on being squeaky clean with my taxes. I even report the cash tips I get as a volunteer bartender at my local town theater.

Bill

Great advice by Bill/birdma42. I'll just embellish what he's saying a little bit.

Every person has the ability to go back and amend a tax return they've filed. You have until three years after the later of the date the return was originally due (usually April 15th of the following year) or the date it was actually filed. The IRS has the exact same time period in which your return is considered "open" and they can go back to review and audit it. Its commonly referred to by some as a statute of limitations. So as Bill/birdman42 said, that's why you tell people to hold onto their tax records for at least three years.

I actually tell my clients to hold onto their tax info for at least for four years, because I'm always afraid they'll mess up and throw things away too early, based on their return not being due till the following year. For example, your 2021 tax return isn't due yet till 4/15/22, and three years from then takes you till 4/15/25, which would be earliest that the statute of limitations would possibly be up, and beyond which the IRS can no longer audit your 2021 return. I can easily see someone thinking they'll hold onto their tax info for three years after 2021, so to them that means 2022-2023-2024, and come January, 2025 they clean house and throw their 2021 tax data out. Unfortunately, their 2021 tax year is still open to the IRS, but now their records are gone.

And I really more often tell clients to hold onto their tax info for a return they are filing for at least seven years. As Bill/birdman42 had said, there are occasions when the statute of limitations can extend beyond the normal three year period after a return was originally filed or due. This primarily occurs when the IRS discovers that the taxable income on a return was under reported by 25% or more on a previously filed return. In that case the statute of limitations for the IRS going back on a return gets doubled from three to six years, after the later of the returns original due date, or the date it was filed. And thus the reason I more likely tell people to hold on to their tax return info for at least seven years.

And by the way, the info we're talking about throwing away is to support what is reported on the tax returns. You should try to keep copies of all your actual tax returns and W-2s indefinitely. You never know when you might have to prove something to the Social Security Administration, or maybe domestic relations court for a marriage gone bad, as just a couple possible examples for why you want to keep them.

[Seven]

All I'm picturing in my head are two people meeting at an undisclosed location, in the middle of the night, exchanging a bag of cash for some high priced card and both driving away afterwards.

[BobC]

Originally Posted by Johnny630

Paying taxes it’s a good problem to have it usually means you’ve done well on your cards :-) accept it and pay it. Don’t get wrapped up in trying to avoid taxes.

I've always told clients I wouldn't mind paying a million dollars in income taxes every year, because they haven't figured out how to take 100% of my income yet, and that means I'd also made a helluva lot more money than what I had to pay.

[Pjere]

Originally Posted by Johnny630

Paying taxes it’s a good problem to have it usually means you’ve done well on your cards :-) accept it and pay it. Don’t get wrapped up in trying to avoid taxes.

Agreed!


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[chriskim]

Originally Posted by Pjere

Agreed!


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I agreed not to avoid paying tax.. but what about double taxed?

"If I purchase A tv for $700 in January of 2022 and decided to sell it on November of 2022 for $600 through one of those apps, I will be paying taxes for the $700 when I bought it and I’ll get a 1099K from the IRS on 2023 to pay taxes on the $600 I made off the tv I sold. "