Small Business Tax Savings Podcast The New IRS Rule That Could Cost Your Business THOUSANDS
Are you prepared for the IRS’s new 1099-K reporting rules and how they could impact your business's bottom line?
In this episode, Mike Jesowshek discusses the significant changes to the IRS 1099-K rule and its potential impact on small businesses, freelancers, and online sellers. The rule, initially requiring payment processors to report income over $20,000, is being gradually lowered to $600 by 2026. Mike explains how this rule aims to address underreported income and outlines the implications for businesses accepting payments via platforms like PayPal, Venmo, and Stripe. He emphasizes the importance of accurate reporting to avoid IRS scrutiny and offers a free demo call to help listeners prepare their tax strategies.
[00:00 - 06:42] Why the 1099-K Rule Was Introduced
- Mike discusses the significance of the 1099-K for freelancers, small businesses, and gig workers.
- Understanding this rule is key to avoiding surprises during tax season.
- The motivation behind the rule: addressing underreported income from goods and services.
- Report all income accurately, even without a 1099-K.
[06:43 - 10:37] Who This Rule Impacts
- Mike dives deep into who’s affected: freelancers, gig workers, and small businesses.
- Proactively distinguish between personal and business transactions.
[10:38 - 14:22] Timeline and Rollout of the Rule
- Breakdown of the phase-in thresholds:
- 2024: $5,000
- 2025: $2,500
- 2026: $600
- Mike highlights potential changes due to legislative pushback.
- Stay updated on the latest developments and adapt your approach.
[14:23 - 18:58] Avoiding Tax Issues and Next Steps
- Mike shares tips for accurate reporting and reconciling 1099-K forms with your tax returns.
- Be proactive in managing your taxes to avoid penalties and ensure compliance.
Direct Quotes:
“The 1099-K is a tool to let the IRS know what funds are being processed and who is receiving those funds.” - Mike Jesowshek, CPA
“This rule isn’t about changing how taxes work; it’s about changing how income is reported.” - Mike Jesowshek, CPA
“Don’t wait for a 1099-K to report your income. Always report all earnings to stay on the right side of the law.” - Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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