As reported previously, beginning in 2023, third-party processors like Zelle, Venmo, and Paypal will be sending out 1099’k’s at the end of the year for entities earning more than $600 in income annually. For the 2022 filing season, this income was only reported if they processed more than $20K per year.
To be clear, whether the income is reported to the government or not, all income must be reported on your income tax returns. Not doing so is generally considered income tax evasion which is punishable by additional tax, interest, penalties, and up to 12 months in a federal penitentiary with three hots and a cot.
This change in reporting requirements may necessitate a change for many enterprises. Picking up the income is one thing. Properly reporting ordinary and necessary expenses for the production of that income is another thing altogether.
For many, the time to think about this should be now rather than next February or March. Capturing those expenses in a seperate checking account, used for business purposes primarily, will make our work at the end of the year much easier. A separate credit card may also be quite useful.
But realizing that this will be happening and planning for the eventuality is important. If you put this on your pay-no-mind list again this year, not handling it correctly may lead to an audit.
And at that point, we might be in a non-defensible position.
Let me leave you with this.
Legislation proposed by Congressional Republicans has tied defunding the IRS to raising the debt ceiling. The bill, recently introduced in the House, includes the following.
1 – An increase in the debt ceiling of $1.5T
2 – Spending cuts that would save $4.5T over the next 10 years
3 – A repeal of most of the $80B in Additional IRS Funding
4 – An end to student loan forgiveness
5 – A reduction in clean energy incentives
6 – An expansion of work requirements for Medicaid and Food Stamp Recipients
7 – A return to the 2022 federal discretionary spending limits
8 – And a limit on future spending growth of 1% annually
The bill is expected to pass the House. If it gets to the Senate where Democrats hold a majority, it’s obvious that some horse trading will be necessary.
We’ll see what the future brings.
We’re all going to get through this. Let’s get through it together.
As an inducement, we’re offering 33% off your first six months of bookkeeping and / or the first three months of your payroll services on a complimentary basis. In order to claim this benefit, please click on the appropriate button and provide your contact information. We’d love to help you.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, M&A Due Diligence, Payroll services, or Accounting and tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.SalarySolutions.net
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.