Tax Law Changes Effective 1/1/12 for 1099 Reporting

Tax law changes have taken effect which impact reporting for 1099’s.  Beginning in 2012, payments made to vendors with a credit card, payment card, or third-party network transaction should not be reported on a 1099-MISC Form. 
It’s important that you change how your transactions are recorded.

Due to this reporting change, it will be important to clearly indicate in your QuickBooks or accounting software when you pay for something with a credit card versus cash or check. If you are not sure how to do this, please give us a call and we will walk you through it.  It will be easier to start recording your transactions now, rather than trying to go back and figure out the credit card charges at the end of the year.

Going forward, any credit card processor (banks, merchant accounts, PayPal, etc.) will be required by law to track certain sales and report them to the IRS on a monthly basis.  The credit card sales will be reported in total on a Form 1099-K after each year end. For 2011, you may receive a 1099-K. This will include all payments made TO you by credit card companies.  You will want to include these forms in the client information that you send in with your 2011 tax work papers.  If you have any questions concerning this change, please contact our office.  We would be glad to assist you!


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