Income Tax And Credit Cards - Other News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Income Tax And Credit Cards

Income Tax And Credit Cards

Income Tax And Credit Cards

Anyone feeling a severe post-holiday financial hangover isn`t likely to shake the headache any time soon thanks to it being tax season already. This year there will be a not insignificant number of changes, in the form of both alterations to standard forms and forms that are altogether brand new. The changes are sure to make a potentially complicated process even more so, and all taxpayers are encouraged to assemble their documents and file early, if possible. More than ever, it is imperative for everyone filing taxes to keep good records and hold on to all tax-related paperwork.


The brand new Merchant Card and Third-Party Network Payments form, to be known as the 1099-K, is sure to cause many people quite a bit of grief. This form specifically targets individuals who run a business from home or sell items or services on the side and accepts payment by credit cards or through a third party network like PayPal (which is operated by eBay). This form was created to help the IRS better detect underreporting of earned income and will likely help them flag audit targets.


The trouble with the 1099-K is that it reports the gross amount paid to the seller or merchant to the IRS, without reflecting any adjustments made for charge-backs or fees. This means that the information the IRS has may not match up with the amount reported by the seller or merchant on their income tax filing.


Another form consumers need to be on the lookout for is the 1099-MISC form coming in the mail from a credit card company or bank. The 1099-MISC form is a tax form used to account for Miscellaneous Income, which is what banks consider those promotional payments doled out to new accountholders to be. Anyone who opened up a new bank or credit card account over the past year and received cash back or reward point bonus as a result should be expecting to receive a 1099-MISC. Promotions where a new accountholder received a chunk of miles as a sign-on bonus are being valued as cash by some financial institutions, making them susceptible to a 1099-MISC.


The good news is that banks and the IRS don`t (yet) consider rewards points earned via purchases made as income. Instead, it is considered to be the same as getting a rebate and not as a commission payment. Therefore, consumers are not taxed on their credit card rewards.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

MasterCard and Fred Segal Open Shop on the Strip

Posted: April 20, 2018

MasterCard and Fred Segal have opened Rock ‘n Roll Holy Land on Sunset Strip, an immersive exhibit giving people an insider’s view of the history of the Sunset Strip. The shop also puts a unique digital spin on window shopping using ... Continue reading
New Amex Centurion Lounge Opening in Denver

Posted: April 19, 2018

Are you a regular at Denver International Airport (DEN)? If so, you may want to check out the new Centurion Lounge when it opens next year. It’s stated to be the eleventh lounge in the Centurion line up. Offering airfield views and taking ... Continue reading
Crate and Barrel and Synchrony Bank to Offer New Credit Cards

Posted: April 18, 2018

Do you shop for furniture and household wares at Crate and Barrel? If so, you might be interested to know that the home furnishings retailer has inked a deal with Synchrony to offer customers not only new credit cards and financing ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
For Excellent, Good Credit
Our application is quick and easy with instant pre-qualification available
For Fair / Good Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!