Tax thread

[3ZeroT]

Ah my bad, I misunderstood.

[zale]

IRS doesnt care if you earn money illegally (you could even be a drug dealer)

Against T&C doesn't mean illegal

What's the worst that can happen if you don't file the 1099-k for all the PP and AP (and other) money, and you get audited? Will they come down harder on you?

[MarkS]

What's the worst that can happen if you don't file the 1099-k for all the PP and AP (and other) money, and you get audited? Will they come down harder on you?

If they determine that taxes aren't owed then there is probably no problem. If they determine that taxes were owed (they may decide that the points earned in this case are very much not a rebate) then there are penalties for not filing and late fees.

Either way, if Amazon and Paypal are reporting to the IRS that they issued you a 1099, it's not smart to ignore it on your tax return because that will instantly raise a red flag.

[3ZeroT]

What's the worst that can happen if you don't file the 1099-k for all the PP and AP (and other) money, and you get audited? Will they come down harder on you?

I would say if you receive a 1099-K you should definitely include it with your filing or that will attract more unwanted attention.  But there is a place where you fill in the cost basis, so if the payments you received came from yourself or your spouse that is equal to the cost and the net gain is 0.  So you file your 1099-K as you are supposed to but you don't owe any tax on it.

[HelpMe]

Be very careful giving advice on what is legal and illegal. If you think that someone puts down they are a drug dealer with large amounts in unreported income that the IRS won’t report that then I have a bridge to sell you. Also many are claiming on AP they are sending 1k to someone for “goods and services”. This needs to be reported even if no 1099 is generated.

[MarkS]

Be very careful giving advice on what is legal and illegal. If you think that someone puts down they are a drug dealer with large amounts in unreported income that the IRS won’t report that then I have a bridge to sell you.

It looks like you are correct that the IRS can report you for doing illegal activities.
I mistakenly thought that they can't. They are stupid for doing that because now why do they expect anyone to report their illegal activities? If they were smart the would provide amnesty for the illegal activity, and then drug dealers may actually report their income to avoid being prosecuted for tax evasion (which is probably much easier for the govt to catch than actual drug dealing).

That doesn't affect this AP PP discussion though because it's not breaking any laws.

[HelpMe]

That doesn't affect this AP PP discussion though because it's not breaking any laws.

Also many are claiming on AP they are sending 1k to someone for “goods and services”. This needs to be reported even if no 1099 is generated.

[meshugener]

And if I tell AP I pay it for goods & services, so what??
The IRS cares if I say a lie for AP?

[HelpMe]

And if I tell AP I pay it for goods & services, so what??
The IRS cares if I say a lie for AP?

So you are going to tell them this is a cash advance? Are you claiming the rewards on the cash advance?

Oh what a tangled web we weave,
When first we practise to deceive!

[meshugener]

I'm claiming?? They're honoring it for me!!
The IRS couldn't care less if Chase paid me a few points NY mistake.

[SGF]

Banks inform the IRS of transactions that are over 10k. Other than that I am not exactly sure

i once heard from s/o that works with the IRS that theres nothing wrong with having $2 - 3K going around with AP every month, its a normal thing and they wont make problems, the issues start when ppl have $10K + going around every month, that would raise a red flag.

[Name Changed]

Name Changed meant that they don't care about the illegality - as long as you report it and pay tax on it. He was saying that a drug dealer must report their income and pay taxes and the IRS doesn't go reporting them to the DEA.
He wasn't saying that since it's illegal the IRS doesn't care about the income.
Of course since drug dealing is usually a cash business done by criminals, they usually don't report it. Which is why some mobsters or drug dealers who managed to stay under the radar of law enforcement, ended up going to jail for tax evasion (like Al Capone).

The point is, that the fact that the T&C of the CC company say you can't advance cash with AP, doesn't matter to the IRS.

Yup, that's what I'm sayin...

[SGF]

i recently got a letter from Bank of america saying that i earned $10 in the past year from my savings account and they sent a form to file taxes, is there a need to do this? will i gain or loose anything from this?

[Name Changed]

i recently got a letter from Bank of america saying that i earned $10 in the past year from my savings account and they sent a form to file taxes, is there a need to do this? will i gain or loose anything from this?

Every bank sends out 1099 on the interest account holders earned. You need to file taxes with these forms...

[HelpMe]

Every bank sends out 1099 on the interest account holders earned. You need to file taxes with these forms...

For small amounts (varies by FI) you will not receive a 1099 but still are required to claim it.

[MarkS]

For small amounts (varies by FI) you will not receive a 1099 but still are required to claim it.

And if you find a $100 bill on the street you are required to claim it too.

[HelpMe]

And if you find a $100 bill on the street you are required to claim it too.

I thought you were required to turn it in.