Now, any new tax form creates another level of worry for even the most organized business owners. So, in order to ensure its clients would not fear yet another tax form arriving in the mail, Outright, which supplies businesses with online accounting services, created a primer in chart form that explains what the 1099-K is, and gives readers a tax lesson along the way.
For instance, did you know that under-reporting across taxpayer categories accounted for an estimated $376 billion of the gross tax gap? Makes you want to do your part to pay your taxes, right?
But don’t pay too much. Box 1 in the 1099-K includes not only gross sales, but refunds, returns, charge backs, shipping fees and other charges that might be deductible. Make sure you track those charges, so you don’t overpay in taxes.
And, don’t forget what else you can deduct from business income. These are some of the most overlooked tax deductions, according to Outright: healthcare, depreciation on vehicles and out-of-town business travel are all sanctioned tax deductions.
Now, if you can get away with some of the most outrageous write-offs — cosmetic surgery, hotel charges for viewing adult movies, and a fine for crashing into a tollbooth — then perhaps you can avoid the tax issues suffered by celebrities such as Crocodile Dundee star Paul Hogan, who owes $37.5 million to the Australian Taxation Office; and Nicolas Cage, who $3.8 million owed to the IRS – and that’s after paying off a $14 million tax debt!
On second thought, maybe it’s best just to fill out the forms and forget the tricky accounting. After all, that national debt isn’t going to go away on its own. Everybody has to do their part. Even if it means filling out one more form.
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