The notice provides that the new February due date established under a recent law change to provide Form 1099-B information to customers also applies to other tax information customarily reported to customers with Form 1099-B statements, such as interest and dividends.  This means that customers can expect to receive Forms 1099-INT and 1099-DIV late as well.

If you normally receive Forms 1099-INT, 1099-DIV and 1099-B for investment income and transactions, be aware that these forms will arrive later than usual this year.  Some clients have reported that they have received letters from financial institutions saying not to expect these forms until the end of February (although the official due date is February 17).

As a tax preparer, I’m not particularly happy about this change, but on the bright side, I’m hoping the extended deadline will cut down on the number of corrected 1099s issued this tax season.

Related Posts:

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• Reporting 1099 Income
• Where to Find 1099 MISC Forms

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The Recovery Rebate Credit is a special one-time benefit that most people received last year in the form of an Economic Stimulus Payment. But people who did not receive the maximum amount of the Economic Stimulus Payment, or whose circumstances have changed, may be eligible now.

In most cases, the IRS will calculate whether a person is eligible and how much of the credit may be due automatically. To allow the IRS to calculate this automatically, simply file your 2008 tax return and follow the “Credit Figured by the IRS” instructions. However, may choose to calculate the Recovery Rebate Credit themselves instead.

In order to calculate the Recovery Rebate Credit, you to know the amount of the Economic Stimulus Payment you received in 2008. If you’re having your tax return prepared by a tax preparer, make sure you give them this info so they can calculate your return correctly.

For more information, please visit Recovery Rebate Credit Is for Individuals Who Missed Last Year’s Economic Stimulus Payment on the IRS website.

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• W-2s and 1099s Due Monday!
• Final Tax Estimate for 2008 Approaching Quickly
• Good Reads: Interesting Tax Posts This Week

Don’t forget to file your tax return and/or your extension by the end of today!  I wanted to quickly address a question I hear very frequently, especially on Tax Day…

"What if I can’t pay the balance due on my tax return?"

The first thing you should understand is that filing an extension does NOT extend the time to pay your taxes.  This is a common misunderstanding.  Filing an extension only extends the time to file your tax return, it does not extend the time to pay.

The best thing to do if you owe taxes is to send in a payment with your extension request.  If you can’t send in the total balance due, send in as much as you can.

Filing an extension can still be helpful because it gives you more time
to review your tax return and make sure you haven’t missed any
deductions.  It also reduces the penalties you will incur (there are
late filing and late paying penalties; filing an extension will
eliminate the late filing penalty, but not the late paying penalty).

If you owe a significant amount, you should consider applying for a payment plan with the IRS. 
While you will still pay interest and penalties, this will keep the IRS
from garnishing your wages or filing liens against your property.

Another alternative is to use a credit card to pay your taxes, however
the IRS does charge a fee for this service.  This might make sense if
you have a low interest rate on your credit card compared to the
interest and penalties that you could pay to the IRS.

For more information directly from the horse’s mouth, please visit Filing Late and/or Paying Late at the IRS website. 

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While I originally started this blog to answer tax questions for eBay sellers, the tax tips on this blog are really for all online businesses – whether you sell on eBay, run affiliate programs, have a service business, or have another home-based business, this blog applies to all of you!

So if you’re a WAHM, a service business, an affiliate marketer, or some other online business owner, I would like to welcome you to my blog.  I look forward to sharing tax tips for all online business owners in 2008!

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As I mentioned in my year end tax tips post, now is the time to do tax planning to reduce your 2007 tax bill.  Kay continues this theme in the 25th tax carnival…

"
To paraphrase a beloved seasonal song, it’s the most wonderful tax time of the year!

That’s right. During this time of gift giving, make sure you get the best present of all — a lower 2007 tax bill.

If you wait until April to ask what you can do to lower your tax bill, the answer will be not very much!

But if you consider your tax situation and options now, before
the tax year is over, you still have a chance to keep money in your
pocket instead of putting it in Uncle Sam’s grasping hands.

Heck, you might even be able to save enough to pay off your post-Christmas credit card bills! So let’s get right to our holiday edition of Merry Taxes 2007!"

Click here to continue reading and to see my own contribution to the tax carnival!

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Ok – it’s not tax season yet, but I ran across Ina’s article, and wanted to share it, so here it is…

—————————

The IRS and eBay: Tax Season is Here

By Ina Steiner
               
AuctionBytes.com
                April 03,  2005

It’s
that time of year – April 15 is looming. As if I wasn’t already
thinking about it, the Associated Press ran an article about eBay
sellers and whether they were required to report eBay income on their
taxes.

How do you know if you are required to report eBay income in your
taxes? Barbara Weltman, publisher of the "Big Ideas for Small Business"
newsletter and author of several books, including, "J.K. Lasser’s Small
Business Taxes 2005," said the rule as the tax law states it is that
you have to report all income from whatever source derived.

However, an eBay sale may not be income. She explained that if you
purchased a designer dress for $1,000 and sold it on eBay for $200,
that is a loss.

Whether your eBay selling is a hobby, and the frequency of your
sales, doesn’t matter, Weltman said. Whether it is income or not is
what matters.

Weltman said eBay sellers who do not report their income are missing
out on opportunities. It’s the right thing to do, and the law, but in
addition to helping you sleep at night, reporting income allows you to
report expenses, like Internet access fees and all expenses related to
eBay selling. There may be an opportunity to take a home office
deduction, she said. And, if you show a profit, you can put money in a
retirement plan.

Some people are concerned that eBay is cooperating with the IRS, making it easier for the IRS to come after Powersellers.

eBay spokesperson Chris Donlay said, "The IRS would need to provide
us with a subpoena for a specific individual before we would provide
any data. I don’t believe this is something that would be typically
done for a routine audit, though it theoretically could happen." He
said this is true for both eBay and PayPal.

Where do you learn how to report eBay income on your taxes? Weltman
suggested IRS Publication 334, "Tax Guide for Small Business" (http://www.irs.gov/pub/irs-pdf/p334.pdf). She said her newsletter

and book, "JK Lasser’s Small Business Taxes 2005" (http://www.amazon.com/exec/obidos/ASIN/0471683825/auctionbytescom) can also help.

If you have questions, talk to a tax professional. Additional resources are listed below.

IRS Industry/Profession pages (IRS said they will be adding a section on online auctions):
http://www.irs.gov/businesses/small/industries/index.html

"Taxes Part One: Do I Have to Report My Auction Earnings?" By Mike Batsimm
http://auctionbytes.com/cab/abu/y201/m03/abu0033/s03

"Taxes Part Two – How Do I Report My Auction Earnings?" By Mike Batsimm
http://www.auctionbytes.com/cab/abu/y201/m03/abu0034/s05

IRS Section for Small Businesses and Self-Employed
http://www.irs.gov/businesses/small/index.html

Is it a Business or a Hobby?
http://www.irs.gov/businesses/small/article/0,,id=99239,00.html

Publication 535 (2004), Business Expenses
http://www.irs.gov/publications/p535/index.html

Recordkeeping
http://www.irs.gov/businesses/small/article/0,,id=98575,00.html

IRS Forms and Instructions
http://www.irs.gov

Ernst & Young Tax Guide 2005
http://www.amazon.com/exec/obidos/ASIN/1593150199/auctionbytescom

eBay Radio Interview with Barbara Weltman, August 2003 (Scroll down)
http://www.wsradio.com/ebayradiobytopic/businessadvice.htm

eBay Radio Interview with Barbara Weltman, March 2005 (Scroll down)
http://www.wsradio.com/ebayradio/march2005.htm

UK Article: "Taxman has sights set on eBay traders"
http://business.timesonline.co.uk/article/0,,9559-1419932,00.html

"Australian Tax Office Investigates eBay PowerSellers"
http://www.auctionbytes.com/cab/abn/y04/m09/i16/s01

Related Posts:

• PayPal and Ebay Must Report to the IRS
• Do You Pay Taxes On eBay Income?
• The eBay Selling Coach is Grilling Me on Taxes

—————————————-

Do You Pay Taxes On eBay Income?
By Tim Knox

Q: I read your last column about paying income tax on eBay sales if you are doing it as a business, but as someone who only sells on eBay occasionally I’m still confused if the IRS rules apply to me. Can you tell me more?
– Norman L.

A: Last week’s column on whether you were required to report income earned from eBay sales to the IRS sparked a number of additional questions and comments from eBay sellers who were hoping that I could somehow validate that their eBay activities were mere hobbies instead of actual businesses and therefore not susceptible to IRS taxation.

Several folks argued that just because their little eBay hobby generated a little cash, that didn’t make it a full blown business. It seems they consider the income from their little hobby to be financial manna from Heaven and thereby not taxable by earthly tax collectors. I’ve always been amused by folks who try to impress me with talk about their "little side business" but when the subject turns to taxes they suddenly refer to it as "my little hobby."

All kidding aside, the conclusion that I came to after reading each email was always the same: while you may think selling on eBay is just a fun pastime and the money you’re making is not reportable as income, depending on the circumstances, the IRS would probably disagree with you.

It seems that everyone likes making money, but hates carving off a piece for good old Uncle Sam. Welcome to free enterprise, folks. If you’re going to come to the dance you have to pay the fiddler.

The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on Ebay.

In its most basic sense, the IRS rules can be interpreted to mean that if you buy an old vase at a garage sale for $10 and sell it on eBay (or elsewhere) for $20 you made a $10 profit and therefore must report it as income and pay Uncle Sam his fair share.

In reality, if you are a casual seller who only sells a few items on eBay every now and then it’s doubtful the IRS is going to let loose an army of agents to collect taxes on the few bucks you make. However, if you consistently sell on eBay the IRS may deem your activities to be business oriented and you will be required to file a Schedule C and claim the income.

As mentioned last week, the IRS uses a number of factors to determine if an eBay hobby that generates sales revenue is actually a business.

These factors include: – Do you carry on the hobby in a business-like manner? – Do you spend considerable time working on the hobby? – Do you depend on income from your hobby for your livelihood?

If the answer to any or all of these question is yes, you’re running a business, not carrying on a hobby, and you are responsible for paying taxes on your income.

What’s eBay’s take on all this? Naturally eBay is vehemently opposed to anything that might rock the eBay boat. eBay does not does not issue 1099 tax forms to sellers, nor does it report seller’s sales figures to the IRS.

Ebay considers itself merely to be a facilitator, meaning that they provide a marketplace in which buyers and sellers come together to do business.

Furthermore, under it’s current system it would be impossible for eBay to issue accurate 1099s to sellers. eBay does not track if a seller actually gets paid by the buyer, so eBay has no idea how much money – if any – actually changes hands at the end of each transaction.

On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc.

You might also be able to deduct things like the purchase of a computer for business use, office space (even if it’s a home office), office supplies, and more.

Talk to your accountant if there’s any doubt as to whether you should or should not be paying taxes on your eBay earnings.

Here’s to your success!

Tim Knox
Entrepreneur, Author, Speaker, Radio Host
Check Out Tim’s New Radio Show! =>http://www.timknoxshow.com
Preorder Tim’s New Book =>Everything I Know About Business I Learned From My Mama
http://www.timknox.com/amazon/

Article Source: http://EzineArticles.com/?expert=Tim_Knox
http://EzineArticles.com/?Do-You-Pay-Taxes-On-eBay-Income?&id=40793

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Hey eBay Sellers! Now that you’re earning a profit on eBay, you’re probably wondering… Are you required to file a tax return? What expenses you can deduct? How to minimize your taxes, so you can keep more of your profits in your own pocket! Announcing the free ‘Tax Tips for eBay Sellers’ special report! In this report, you’ll learn: If you’re required to pay income taxes on your ebay sales How to qualify for and deduct your home office About self employment taxes and how to minimize them The most common deductions available to home-based business owners All about estimated tax payments including when & how to make them How to value your inventory for your tax return And more! Claim your free ‘Tax Tips for eBay Sellers’ special report here! First Name: Email: Kristine A. McKinley, CPA, Certified Financial Planner®, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis. For more information on eBay taxes, visit our blog at http://www.ebaytaxtips.com/

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If you’re not familiar with Squidoo, it’s a social networking site, like myspace, but geared towards business owners.  You can write about your business, sell products, add videos, link to other blogs and websites, and much more. 

Check out our Squidoo page here.  If you like it, please be sure to leave a comment or to ask a question.

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