If you use a third-party payment platform, such as paypal, Venmo either cash appIn order to collect payments for your side gig or business, the Internal Revenue Service (IRS) would like to remind you to report payments of at least $600.
This rule is aimed at individuals who run a side business, run a small business or work part-time. So if you’re just sending money to friends for restaurant bills or vacations, or collecting lump sum payments to sell something online, this won’t apply to you.
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Prior to 2022, third-party transactions for business owners and side hustlers followed various limits: individuals were required to report gross payments of more than $20,000 and income if there were more than 200 transactions, according to irs, But as a result of the American Rescue Plan Act, any transaction over $600 after March 11, 2021 must be reported to the IRS, regardless of the number of transactions you make.
These earnings were already taxable so this is not a change in tax law, but just a reporting change.
To report these earnings and transactions, you must file Form 1099-K. According to the IRS, you should have received this form from each third-party payment platform through which you have received transactions. If you receive the form for an individual transaction in error, the IRS recommends that you contact the payment platform for correction or attach an explanation to your tax return.
How to Prepare to File Taxes as a Business Owner
Tax season already seems daunting for individuals, but if you’re a business owner — and a new business owner at that — it can feel even more stressful. If you expect to file Form 1099-K for this year, make sure you keep an up-to-date record of your transactions, balance sheets and other financial documents. Otherwise, mistakes when filing could trigger an IRS audit.
It also helps to work with a professional bookkeeper or accountant who can help you get organized and understand your tax liability so you don’t feel blindsided at the last minute. If you need to hire a professional, consider using one. business credit cardlike Inc. Business Unlimited® Credit Card either american express blue business cash card, so you can get rewarded for business spending. The Ink Business Card lets you earn 1.5% cash back on all business-related spending and the Blue Business Cash Card lets you earn 2% cash back on eligible business purchases.
Inc. Business Unlimited® Credit Card
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Prize
Earn 1.5% cash back on every purchase you make for your business
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welcome bonus
Earn $900 in bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening
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Annual Fee
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intro apr
0% for the first 12 months from account opening on purchases; N/A for Balance Transfer
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regular apr
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balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
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foreign transaction fee
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need credit
Blue Business Cash™ Card from American Express
american express on secure site
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Prize
Earn 2% cashback on all eligible purchases up to $50,000 per calendar year, then 1% cashback earned will be automatically credited to your statement
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welcome bonus
Earn a $250 statement credit after you make $3,000 in purchases with your card in your first 3 months.
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Annual Fee
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intro apr
0% for 12 months on purchases from account opening date
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regular apr
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balance transfer fee
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foreign transaction fee
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need credit
turbotax self employed
TurboTax’s secure site
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cost
Cost may vary depending on the plan selected – see plan-wise analysis in the description below
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mobile application
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live help
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better business bureau rating
pros
- Step-by-step guidance with Q&A format that’s easy to follow
- TurboTax provides live on-demand advice and final review from a tax expert or CPA
- Live Full Service has a tax specialist on hand to prepare, sign and file your return
- Guaranteed accuracy and maximum refund*
- Audit Assistance, which provides free assistance when you receive an IRS or other tax notice
Shortcoming
- More expensive than other software programs
- Live expert support plans cost extra
Cost Analysis by Plan:
Save an extra $20 on TurboTax Self-Employed – Prices below do not reflect the discount; Click “Learn more” for details
- Self employed (for personal and business income and expenses): $89* federal, $39* per state
- live self employed (Includes help from tax experts): $199* federal, $49* per state
- full service live self employed (Includes help from tax experts): $389* federal, $49* per state
* Click Here For TurboTax Offer Details and Disclosures
H&R Block
H&R Block’s secure site
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cost
Cost may vary depending on the plan selected – see plan-wise analysis in the description below
-
mobile application
-
live help
-
better business bureau rating
pros
- Simple step-by-step guidance that’s easy to follow
- Unlimited on-demand chat or video support with online support plans
- Ability to speak to a tax expert with an average of 10 years of experience (additional cost)
- Over 11,000 physical locations so you can meet with a tax expert in person
- Maximum refund guarantee, or H&R Block will refund the plan fee you paid
- Audit Support Guarantee, which provides free assistance when IRS or other tax notices are received
- 100% accuracy, or H&R Block will reimburse you for any penalties or interest up to $10,000
Shortcoming
- Plans to speak with a live tax expert cost more for federal returns
- One of the more expensive software programs
Cost Analysis by Plan:
- Self employed (for personal and business income and expenses): $91.99 federal, $44.99 per state per state
- Online Help Self Employed (Includes assistance from tax experts): $194.99 federal, $44.99 per state
Editorial Note: The opinions, analysis, reviews or recommendations expressed in this article are those of Select editorial staff only, and have not been reviewed, approved or otherwise endorsed by any third party.