Credit Card News
Advertising Disclosure
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many 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

By
Add to Favorites:
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.

Add to Favorites:

Related News:

Fifth Third Bancorp Upgrades App

By Dar Dowling, Posted: January 20, 2017

Fifth Third Bancorp has upped the ante when it comes to their mobile app, in terms of how many ways users can pay for merchandise – now letting them make payments with all of the available payment platforms. Continue reading
New Credit Card by Amazon and Chase

By Dar Dowling, Posted: January 19, 2017

Amazon.com, Inc. and Chase have joined together to roll out the new Amazon Prime Rewards Visa Signature Card offering 5% back on all Amazon.com purchases. Continue reading
Wix and Square Team Up to Make Payments Easier

By Dar Dowling, Posted: January 18, 2017

Wix, a cloud-based web development platform letting people set up a wide range of websites, is teaming up with Square to provide merchants and entrepreneurs a new method of taking payments for products and services bought online and in ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Unlimited 1.5x rewards on every purchase, every day. For every $1 you spend, you earn 1.5x Miles.
For Excellent, Good Credit
You could turn $200 into $400 with Cashback Match™. We’ll automatically match all the cash back you earn at the end of your first year. New cardmembers only.
For Excellent, Good Credit
Guaranteed $500 Unsecured Credit Limit
For Bad Credit