People from around the country have flooded my Contact form with questions about the IRS Form 1099-K, and “1099-K” is the single most popular search term on my site to date. I’m told that it’s difficult to figure out “where to put Form 1099-K” in some of the retail tax software programs used by DIY’ers. So
1) What is a Form 1099-K?
It’s a new information reporting form which, according to the IRS, you will receive if during 2011 one or both of the following situations applied to you:
1) you received any payments from merchant card transactions (such as Visa or MasterCard), or
2) you received payments from third party payment networks (like PayPal) above the minimum reporting thresholds, which are gross payments that exceed $20,000 AND comprise more than 200 transactions.
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In case you haven’t already hired a professional tax preparer this year, or you’re on the fence about it, here are five reasons why I think you should do so now.
Note that by “professional” I don’t mean the good folks at H&R Block or Liberty Tax. There’s nothing wrong with them, but those people come and go. I mean you should consider hiring someone with whom you can establish a long-term relationship. Read on for five reasons why.
1. You’ll save money.
Hiring a tax pro will almost surely save you money in the form of missed deductions and credits. (Your CPA can also help you avoid penalties and interest because — OOPS! — you forgot the corporate tax deadline is March 15th, not April 15th.)
A colleague of mine once said, “There should be a law which states that all Americans must have their taxes prepared by a professional.” She didn’t say this because she’s greedy. She said it because after ten years of tax prep experience, she’s seen over and over the errors made by well-meaning people which aren’t often discovered by consumer tax software.
Do you know how to deduct the start-up expenses for your new restaurant?
Do you know how to figure out and substantiate your home office deduction?
Isn’t there a chance that by not knowing these absurdly difficult details intricacies, you’ll make a mistake that costs you money?
Last I checked, Turbo Tax for small business owners starts at $75, and it frankly doesn’t do a super awesome job of guiding taxpayers through these and many other questions. The additional cost of paying a CPA to prepare your tax return is a worthy investment in your peace of mind. (My rates for tax preparation start at $250. Plus you can call or email me anytime, and depending on the nature of your question, I’m usually happy to help for free.)
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