This is a contentious subject with many people claiming to know how to file your taxes and many of them trying to find ways to game the IRS and claim as little as possible.
Here's the deal. If you order a total amount in excess of $600 and possibly at some point this may go up to $2000 you will be able to download a 1099-NEC. If you order less than that you will NOT receive a 1099, and neither will the IRS.
If you receive a 1099 you MUST report it on your taxes as income. I cannot tell you what type of income, except that my CPA reports it as self employed income. I have seen many "sovereign citizen" types try all sorts of mental gymnastics to avoid paying the taxes that they have accrued. Some people have reported as much as $17,000 in orders. I do not know what the tax is on that exactly but if it is something like 19% then the taxes you would owe would be about $3,230. Keep this in mind when you are going hog wild ordering all that junk. You have to pay the piper.
Here is what will most likely happen if you try to one up the IRS. You very likely will be on the receiving end of an audit. This is not pleasant, I have had to deal with this twice, once for a parent, and once for myself. In both cases it took 6 months to resolve. in once case it was in my parents favor, and for myself I had made a mistake of not filing a 1099 I did not know about. THE IRS SURE DID.
They will wait a couple of years to inform you of the problem, and send you a nastygram that basically says pay up criminal scum. You will accrue interest, penalties, and the IRS does not care if you do not have the money. "PAY UP, do it NOW or the interest and penalties will increase" is most of the response you will get. Good luck getting a person on the phone. Some people have reported not having a problem talking to an agent, in my case it took 5 months to get someone on the phone that would actually listen to what the issue was with my parents return, and I never got anyone on the phone for my case. I had to respond through their portal, and they would ONLY respond in snail mail letters which would take weeks to get to me. I finally hired a CPA to deal with it. When all was said and done, I still had to pay the taxes I owed on the 1099, and most of the penalties and interest. the CPA did save me a couple thousand even after paying his fees.
so DON'T try to game the IRS you WILL lose.
No comments:
Post a Comment