{"id":5686,"date":"2022-12-11T20:11:58","date_gmt":"2022-12-11T20:11:58","guid":{"rendered":"https:\/\/johndelavera.com\/links\/?p=5686"},"modified":"2022-12-11T20:11:59","modified_gmt":"2022-12-11T20:11:59","slug":"sell-more-than-600-in-2022-you-will-get-a-1099-k-this-year","status":"publish","type":"post","link":"https:\/\/johndelavera.com\/links\/sell-more-than-600-in-2022-you-will-get-a-1099-k-this-year\/","title":{"rendered":"Sell more than $600 in 2022? You will get a 1099-K this year!"},"content":{"rendered":"\n
From Cleer.tax

If you sell online and process transactions through\u00a0Stripe, Shopify or Paypal, or sell on third-party sites eBay, Amazon or AirBnB, be prepared for the new 1099-K rules for all sales over $600 – increased from the $20,000 threshold.

Read our FAQ below for\u00a0more info on the new 1099-K rules, and how you can mitigate those expenses.

Purchase your 2022 Tax Return now to be ready for the change.\u00a0 Your tax accountant can advise you on how to prepare and get your own 1099s out by January to be able to deduct those expenses.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Form 1099\u00a0& 1099-K FAQ<\/strong>

Many small businesses and sellers will be impacted by this change in the 1099-K reporting threshold. Even if you\u2019re a cash business that allows some customers to pay by third-party payment processing app, you can expect Form 1099-K to arrive in February 2023.

Why is my Small Business Suddenly Getting Form 1099-K When My Sales Did Not Increase?<\/strong>

Last year, businesses received a 1099-K tax form only when payments exceeded $20,000 for the previous year and processed more than 200 transactions. The new rule for this tax year lowers the gross payments threshold to just over $600 for the year, regardless of the number of transactions.If you have payment accounts with Stripe, Paypal, Amazon, etc., you will likely receive this 1099-K this year if there were $600 or more in gross sales from goods or services in 2022.\u00a0 Only non-US residents, businesses and\/or accounts are exempt.

Many small businesses and sellers will be impacted by this change in the 1099-K reporting threshold. Even if you\u2019re a cash business that allows some customers to pay by third-party payment processing app, you can expect Form 1099-K to arrive in February 2023.

Why should I request form W-9 from my contractors and freelancers?<\/strong>

Certain payments to US service providers\u00a0are required to be reported on 1099. Reportable payments on 1099 are payments to contractors & professional fees over $600\u00a0(1099-NEC)<\/strong>, rental or royalty payments\u00a0(1099-MISC)<\/strong>, interest\u00a0<\/strong>and dividends. Form W-9 is requested so that when you make reportable payments, which is now anything $600 or greater, you’ll have the vendor\u2019s tax information.\u00a0 You can then deduct the payment as an expense against your income. Form W-9 ideally should be requested from all payees before the first payment is made, but requesting by the end of the year if it was missed is important to get your company ready for the 1099 filing season, due January 30th, 2023.\u00a0

What\u2019s the difference between 1099-MISC and 1099-NEC?\u00a0 We used to issue\u00a01099-MISC to contractors.<\/strong>

The 1099-NEC (non-employee contractors) recently replaced the 1099-MISC to report\u00a0payments to service providers, freelancers and independent contractors providing services in the US. 1099-MISC is still used for reporting rental payments, royalties, medical and health care payments, gross proceeds paid to an attorney, and other income.\u00a0

Why should I request form W-9 from my contractors and freelancers?<\/strong>

Form W-9 is requested so that when you make reportable payments, you’ll have the vendor\u2019s tax information.\u00a0 Form W-9 ideally should be requested from all payees before the first payment is made, but requesting by the end of the year if it was missed is important to get your company ready for the 1099 filing season, due January 30th, 2023. If a payee fails to provide Form W-9, the payor should use other means to collect all information needed to file 1099. Incomplete information doesn\u2019t prohibit the payor to file 1099 but in case of missing TIN, backup withholding (24%) is required.\u00a0

Most of my vendors and independent contractors are outside the US and don\u2019t have a TIN or SSN, so they can\u2019t fill out a W-9.\u00a0 What should I do?\u00a0<\/strong>

For workers or vendors outside the US, you should have a W-8BEN (for individuals) or W-8BEN-E (for entities) on file – Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting.\u00a0 Generally, foreign persons are subject to a 30% rate on income they receive from U.S. sources, or lower, depending on the tax treaty between the vendor\u2019s country and the US. W-8 will collect information about who these vendors are, their country of residence and the rate of withholding or if an exempt status shall apply. Not all payments to foreign vendors are subject to withholding, as services rendered outside the US are not considered US sourced. In contrast, dividends or interest paid by a US corporation to its foreign shareholders is US sourced, so it is subject to withholding tax.\u00a0

How or where do I file Form W8-BEN?\u00a0<\/strong>

W-8BEN forms are not filed with the IRS, these forms are retained by the US company as proof that the payees are foreign persons\u00a0 and not subject to 1099. The general rule is that business owners must issue a Form 1099 to each US person to whom they have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments. A foreign person who receives an income payment from the US could be charged with the full 30% withholding rate if he\/she fails to provide W8-BEN.\u00a0 Unless there are changes in the payee information, W8BEN is valid for three years from the date the form is signed.<\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"

From Cleer.tax If you sell online and process transactions through\u00a0Stripe, Shopify or Paypal, or sell on third-party sites eBay, Amazon or AirBnB, be prepared for the new 1099-K rules for all sales over $600 – increased from the $20,000 threshold. Read our FAQ below for\u00a0more info on the new 1099-K rules, and how you can […] More<\/a><\/p>\n","protected":false},"author":2,"featured_media":5449,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"footnotes":""},"categories":[168],"tags":[],"reaction":[],"adace-sponsor":[],"class_list":{"0":"post-5686","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-startups"},"aioseo_notices":[],"wps_subtitle":"","_links":{"self":[{"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/posts\/5686","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/comments?post=5686"}],"version-history":[{"count":1,"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/posts\/5686\/revisions"}],"predecessor-version":[{"id":5687,"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/posts\/5686\/revisions\/5687"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/media\/5449"}],"wp:attachment":[{"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/media?parent=5686"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/categories?post=5686"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/tags?post=5686"},{"taxonomy":"reaction","embeddable":true,"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/reaction?post=5686"},{"taxonomy":"adace-sponsor","embeddable":true,"href":"https:\/\/johndelavera.com\/links\/wp-json\/wp\/v2\/adace-sponsor?post=5686"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}