Latest news with #1099K
Yahoo
a day ago
- Business
- Yahoo
I plan to work until 80. Can I contribute to my IRA while taking RMDs?
I have a few questions about retirement accounts. Thanks in advance. 1) In a few years I will have to take required minimum distributions (RMDs) from my traditional IRA (currently my only retirement account). I plan to work until age 80 or so. Will I be able to continue contributing to the IRA even after beginning RMDs? I plan to work until 80. Can I contribute to my IRA while taking RMDs? Trade Desk's stock sees its worst drop ever, and analysts wonder if Amazon is to blame 'I have a great mortgage rate': I need $80K to buy my husband out of our home. Do I raid my $180K Roth IRA? 2) I'm self-employed. No employees and not incorporated. My income is reported on a 1099-K (basically a pass-through from the company that processes my clients' credit-card payments). I contribute the max to my IRA every year. I will soon, in addition, derive income as an independent contractor and that income will report on a standard 1099. So I'll have both. My key question: Can I open a SEP-IRA for the 1099 income (and possibly even the 1099-K income)? If so, can I contribute to both? Sincerely, Self-Employed Saver See: I've been getting the wrong Social Security Disability benefit for years. How do I fix it? To answer your first question simply — yes. Because it is an IRA, you will have to take RMD — but thanks to the Secure Act, you can continue to contribute to the account so long as you receive earned income. To answer your second question simply — also yes. You can use 1099 income to fund a SEP-IRA since it is self-employment income. The same goes for your 1099-K income if it's self-employment income, too. With this question, there's a bit more to know, though. A SEP-IRA is basically just a traditional IRA for business owners, so it follows many of the same rules as the account you've already come to know. There are, however, a few differences. For example, the maximum you can contribute to a SEP in 2025 is the lesser of up to 25% of your total compensation, which is determined by your net earnings, or up to $70,000. 'There is no limitation when coordinating a SEP-IRA and a traditional IRA,' said Byrke Sestok, a partner at Moneco Advisors. You can contribute to a SEP as well as to your traditional IRA, since the SEP is funded with employer contributions and the traditional IRA is made with personal contributions. 'You can both receive employer contributions to a SEP-IRA and make regular, annual contributions to a traditional or Roth IRA. Employer contributions made under a SEP plan do not affect the amount you can contribute to an IRA on your own behalf,' according to the Internal Revenue Service. RMDs also apply to SEP-IRAs, just so you are aware. Congratulations on such a hard-work ethic. Saving more for retirement while you're still working is always a good thing. 'I feel shaken': A man offered to powerwash my patio for $50. He would not take no for an answer. 'She lives alone': My mother-in-law, 86, gets $1,300 in Social Security. Is that enough to live on? Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
There's a new 1099-K threshold: What you should know if you get paid via Venmo, Cash App or PayPal
Millions of Americans who sell goods online or use third-party platforms such as PayPal, Cash App or Venmo will soon face new tax reporting rules under changes introduced by the One Big Beautiful Bill Act. The bill, signed into law by President Donald Trump on July 4, brings sweeping tax policy reforms, including a reversal of previously planned 1099-K reporting thresholds. 'The changes will offer much-needed relief for casual sellers and small business owners who use platforms like PayPal, Venmo and Etsy,' says Ella Rivkin, CEO of ERPS Group, an accounting firm in New York City. Prior to the new tax law, the IRS was set to lower the reporting threshold to $600 starting in 2026. That would have dramatically increased the number of taxpayers receiving Form 1099-K. The new law reverses that plan, offering relief to millions. Learn more: Trump's temporary tax breaks: 5 'big beautiful bill' provisions that may not stick around for long Here's how the new 1099-K rules work Under the 'big, beautiful bill,' the 1099-K reporting threshold reverts to $20,000 in payments and 200 transactions in a calendar year, effective for 2025 and beyond. This means fewer taxpayers will receive the forms — a welcome change for those who use platforms like PayPal or Venmo for occasional sales or personal transfers. 'By reinstating the $20,000 and 200-transaction threshold for reporting, the law eliminates confusion and reporting requirements for individuals who occasionally sell personal items,' Rivkin says. The updated rules also eliminate confusion caused by the American Rescue Plan Act, which had lowered the threshold to $600 beginning in 2026. To give third-party settlement organizations more time to comply with the 1099-K reporting requirements, the IRS announced in 2024 a phased-in approach to the reporting rules. Here's a snapshot of the rules before and after the 'big, beautiful' tax law: 1099-K reporting thresholds Before the 'big beautiful bill' Current law 2023 and earlier $20,000+ and more than 200 transactions $20,000+ and more than 200 transactions 2024 $5,000+ $5,000+ 2025 $2,500+ $20,000+ and more than 200 transactions 2026 $600+ $20,000+ and more than 200 transactions 'For the 2024 tax year, the IRS will continue using a $5,000 threshold, which was implemented as a transitional measure away from the $600 rule,' Rivkin says. 'Taxpayers should be aware of the differences in reporting rules for 2024 and 2025.' The new law applies beginning with the 2025 calendar year, which means the updated 1099-K thresholds will apply to tax returns filed in 2026. Companies must issue Form 1099-K by January 31 of the following year. Learn more: If you're a fan of sports betting or casino gambling, you won't be a fan of the new tax law Zelle is an exception While most platforms are required to follow 1099-K reporting requirements, Zelle doesn't fall within that category. 'The Zelle platform directly transfers funds from one bank account to another, similar to a wire transfer,' says Monica Houston, a certified public accountant in Brentwood, Calif. 'Because Zelle never has custody of the funds — it simply moves money — it is not subject to 1099-K reporting requirements,' she says. Learn more: How to use Zelle: A beginner's guide to digital payments Who is likely to receive a 1099-K? Form 1099-K is issued to taxpayers who receive payments for selling goods or providing services through third-party networks. Even if you don't meet the threshold, you may still receive a form, and you are still responsible for reporting all taxable income. Payments received for personal reasons — such as gifts or reimbursements for shared expenses — are not considered taxable and should not be reported on a 1099-K. If you receive a 1099-K in error, contact the issuer and request a corrected version with the erroneous amounts removed. Houston recommends having a clear accounting system to distinguish between personal and business transactions. 'I recommend using an Excel spreadsheet or QuickBooks Online to organize your records,' she says. 'A solid accounting system will help ensure you report income accurately on your tax return.' Learn more: 2025 federal tax brackets and income tax rates How to report 1099-K income on your tax return Form 1099-K can reflect various types of payments, which affect how you report the income on your tax return: Personal sales: If you sell personal items at a loss (e.g., used furniture or electronics), the loss is not deductible, but the income can be excluded. If you make a profit, that amount — less your cost — is taxable. Business income: Freelancers, gig workers and other self-employed individuals should report income on Schedule C. Rental income: If you receive rent payments, report them on Schedule E. Learn more: Estimated tax payments: How much you need to pay, and when Rivkin emphasizes that taxpayers are still responsible for reporting taxable income, even if they don't receive a 1099-K. 'Don't assume everything on a 1099-K is taxable, and don't assume something isn't just because you didn't get a form,' she says. 'If you're reselling personal items at a loss or reimbursing a friend, those are not typically taxable events. Keep good records and consult a tax professional if you're unsure.' Learn more: 5 states with the highest income tax rates— and 5 with the lowest
Associated Press
09-06-2025
- Business
- Associated Press
Clear Start Tax Warns: IRS Targets Digital Payments and 1099-K Filers in 2025 Crackdown
New Rules and Lower Thresholds Put Freelancers, Gig Workers, and Online Sellers at Greater Audit Risk IRVINE, CA / ACCESS Newswire / June 9, 2025 / The IRS is tightening its focus on digital payments and third-party transactions in 2025 - and many taxpayers may not be prepared. According to Clear Start Tax, a national leader in tax resolution, individuals receiving income through platforms like Venmo, PayPal, Etsy, and eBay could face new scrutiny as the IRS expands its oversight of 1099-K forms and enforces a much lower reporting threshold. Key IRS Changes Affecting Digital Income in 2025 Under updated IRS rules, third-party payment processors must now issue a 1099-K for total transactions exceeding $600 annually - a steep drop from the previous $20,000 threshold. That change significantly broadens the number of taxpayers who will receive tax documents for digital income they may not have previously reported. Clear Start Tax explains that the new rules aim to reduce underreporting and close the tax gap-but they also put part-time sellers, freelancers, and side-hustlers in the IRS's spotlight. 'The IRS is no longer just looking at traditional income sources,' said the Head of Client Solutions at Clear Start Tax. 'Anyone who uses payment apps or sells online-even casually-could now find themselves facing unexpected tax bills or even audit risk.' Taxpayers Most Likely to Be Affected This shift affects a wide range of Americans, not just full-time business owners. Clear Start Tax identifies the following groups as most vulnerable to missteps or enforcement: Failing to accurately report these earnings or ignoring a 1099-K entirely can trigger IRS notices, penalties, or audits. See if you qualify for relief through the IRS Fresh Start Program by completing a free Tax Relief Survey today. It only takes a few minutes to take the first step toward resolution. Why Documentation Matters More Than Ever Taxpayers receiving 1099-K forms may find themselves confused about how much of that total is truly taxable. Without good recordkeeping, it becomes difficult to separate personal transfers from income, or subtract legitimate business expenses. 'We've seen clients receive 1099-K forms for transactions that weren't income at all,' said the Head of Client Solutions. 'That's why it's critical to keep clear records and respond properly - because the IRS assumes the full amount is taxable unless proven otherwise.' How Clear Start Tax Helps Digital Earners Stay Compliant As these reporting rules evolve, Clear Start Tax provides essential support for taxpayers navigating the new landscape. The firm helps clients: Clear Start Tax emphasizes early intervention as the best way to avoid penalties and keep digital earners on track with IRS expectations. About Clear Start Tax Clear Start Tax is a full-service tax liability resolution firm that serves taxpayers throughout the United States. The company specializes in assisting individuals and businesses with a wide range of IRS and state tax issues, including back taxes, wage garnishment relief, IRS appeals, and offers in compromise. Clear Start Tax helps taxpayers apply for the IRS Fresh Start Program, providing expert guidance in tax resolution. Fully accredited and A+ rated by the Better Business Bureau, the firm's unique approach and commitment to long-term client success distinguish it as a leader in the tax resolution industry. Need Help With Back Taxes? Click the link below: Contact Information Clear Start Tax Corporate Communications Department [email protected] (949) 535-1627 SOURCE: Clear Start Tax press release
