Originally Posted by
aradisc
Go ahead and try that, see what happens. If you are 1099-K'd, you will have to put it on your taxes. Consider this scenario:
1. A person who never has filed a Schedule C files one with $80,000 of revenue. Returns with Schedule C are more likely to be audited, anyways.
2. The same schedule declares $80,000 cost of goods sold and an additional $1400 as fees expense, resulting in a loss of $1400.
3. Profit! Audit!
4. You get the fun experience of explaining your business that has a purpose of..... sending money to yourself, at a cost. Good luck! Sure looks like money laundering to me, and some other feds might be interested...
The scare tactics regarding the 1099-K need to stop because those of you posting about it have no idea what you are talking about. Its laughable that people think Amazon is going to screw over its customers by voluntarily breaking its own policy and report people who meet the de minimis exception under IRC Section 6050W(e) rule that people have to meet the $20k
and 200 transactions for Amazon to
legally be required to file.
Even if you were to get a 1099-K, all is not lost. As long as you report the full gross receipts on the Schedule C (or other form depending on what type of business you ran it through), and perhaps have the deductions equal the gross receipts and not run the credit card costs through, you should be fine in an audit.
Note, I ran this by one of my two friends who are IRS agents. He said: "even if you do get selected, as long as you have documentation supporting your expenses, you'd be fine in an audit." He said he's got bigger fish to fry with high net worth individuals: not showing up to audit meetings, trying to deduct 100% of plane expenses as business expenses, under reporting business income, and other issues.