If you have sold items online this year and/or received money through an Ap such as Venmo or Cash Ap, you may receive a 1099-K form. The federal threshold for these types of sales in tax year 2024 is $5000 and will reduce each year until it reaches $600 in 2026. The income that these forms represent may be from online clothing sales, tickets sales, or even gig jobs. The IRS is making an effort to collect taxes from workers or online businesses who do not traditionally report their income. This article stresses that personal payments between friends and reimbursements are not taxable. If you feel you’ve received a 1099-K in error, there is a place on your 2024 tax forms to report the money as not income. Read more here: Did You Sell Concert Tickets or Clothes? You May Owe Taxes.
Tag: IRS
Preparing to File Your Taxes
What are your tax prep best practices?
With the start of a new year, many begin thinking about filing taxes. The IRS offers simple tips and best practices for getting all of your paperwork in order to make the process go smoothly. This article is especially helpful for those who worry they may not be paying enough and want to take advantage of available deductibles. Read more here: Be ready to file taxes next year
Do You Have a Doctors Note?
HSA card and FSA account holders may use their pre-tax money for various medical needs. When requesting “medically necessary” products and equipment, a doctors note may be required. The IRS advises that certain health and fitness items do not qualify even with an official note from a physician. Some in the medical industry feel this is over stepping on the part of the government or that tax rules favor medicines over prevention. Read more here: Why the IRS doesn’t believe your doctor’s note for tax-free health items
Appropriate Witholding?
As tax time fast approaches you may have realized that your tax withholding was either too much or not enough. What are the best ways to assure this number is correct for future years? Visit irs.gov/witholding to learn more or watch this short video to get started.
IRS Free File
The IRS is again partnering with Free File to offer millions of taxpayers online access to file their taxes at no cost. Want to know if you qualify and how to use this service? Visit IRS.gov/freefile and follow these instructions, listed on the IRS Website.
To find the right IRS Free File product, taxpayers can:
- Go to IRS.gov/freefile,
- Click on Explore Free Guided Tax Software button. Then select the Find Your Trusted Partner tool for help in finding the right product, or
- Use the Browse All Trusted Partners tool to review each offer,
- Select the desired product , and
- Follow the links to the trusted partner’s website to begin their tax return.
Safe Donations
The convenience of online donations makes it simple to give, but also opens the door to criminals hoping to make money using bogus charities. The IRS Newswire recommends using the TEOS to check the legitimacy of any charity you are considering.
From the October, 2023 edition, “Those who wish to make donations should use the Tax-Exempt Organization Search (TEOS) tool on IRS.gov to help find or verify qualified, legitimate charities.
With the TEOS, people can:
- Verify the legitimacy of a charity
- Check its eligibility to receive tax-deductible charitable contributions
- Search for information about an organization’s tax-exempt status and filings”
Sharing your wealth is a great practice, just make sure you are working with reputable groups who are using the money to help those in need.
Unannounced IRS Visits
The IRS announced in July of 2023 that they would suspend all unannounced visits to taxpayer’s homes and places of business. This decision was made as part of the new IRS Strategic Operating Plan. IRS Commissioner Danny Werfel was quoted about this change, “We are taking a fresh look at how the IRS operates to better serve taxpayers and the nation, and making this change is a common-sense step,” Werfel said. “Changing this long-standing procedure will increase confidence in our tax administration work and improve overall safety for taxpayers and IRS employees.” Read more about this update HERE.
IRS Offers Extra Level of Security with IP PIN
The IRS is offering consumers another way to help protect themselves against fraudulent tax claims and those hoping to steal refund checks. With the IP PIN program, taxpayers may apply for a special code to add second level security to their account. The IP PIN is available to anyone with a SSN or an ITIN (Individual Taxpayer Identification Number). To apply, complete the process below:
The IP PIN process
Here’s how the IP PIN process works:
- Taxpayers wanting to get an IP PIN should go to IRS.gov/ippin.
- Once an individual creates an account and completes the prompted steps the IP PIN will be revealed to them.
- Taxpayers should keep in mind that the IP PIN is only valid for one calendar year. Participating taxpayers must acquire a newly generated IP PIN each January.
Read the full article here: National Tax Security Awareness Week, Day 3: IRS Identity Protection PIN can help avoid fraud and tax-related identity theft
Art Deductions
A new scam aimed at art collectors promises tax deductions and discounted art prices along with special services provided by the dealer. Collectors should beware of aggressive promotions that seem too-good-to-be-true where tax deductions are involved. The IRS has multiple, current investigations involving these high dollar art sales businesses. Read more about claiming donated assets here: Publication 561, Determining the Value of Donated Propertyhttps://www.irs.gov/pub/irs-pdf/p561.pdf#_blank
Gig Economy Tax Questions?
Many who have jobs as part of the gig economy do not realize that all the money they earn is taxable. Even without the official tax forms issued to them. Want to know more and better understand how your side-hustles or part time work, paid in any way, are taxable? Visit the IRS Gig Economy Tax Center and find answers to all of your tax related questions.