Latest news with #Form1099
Forbes
5 days ago
- Business
- Forbes
House And Senate Propose Form 1099 Reporting Relief For Gig Workers And Those Who Use Payment Apps Like PayPal For Business
Payment apps like PayPal and Venmo must now report transactions to the IRS—will Congress change the reporting threshold? Republicans on the Senate Finance Committee have unveiled their version of the 'One Big Beautiful Bill Act' which tackle President Donald Trump's domestic agenda. While there are some significant differences between the Senate version and the version passed by the House earlier this year, both packages address unpopular reporting requirements: Forms 1099. The House and Senate versions of the bill would both increase the reporting threshold for Forms 1099-K and 1099-NEC, which means that fewer taxpayers would receive those forms at tax time. For years, taxpayers who provided certain goods or services worth more than $600 were required to issue Form 1099-MISC. That changed slightly in 2012 with the new Form 1099-K. Form 1099-K introduced a requirement for reporting payment transactions, defined as transactions made with a payment card or through a third-party network. Payment card transactions include accepting a card—such as a gift card, credit card, or debit card—for goods or services. A third-party network transaction is one that is settled through a third-party payment network, such as PayPal. For the most part, think payment apps or online marketplaces. While the reporting threshold for Form 1099-MISC had been $600, Form 1099-K required reporting when payments totaled more than $20,000 and more than 200 transactions were settled through a third-party network. No threshold applies to payment card transactions, which include credit, debit, or stored value cards, such as gift cards. The gap between the "old" Form 1099-MISC reporting threshold of $600 and the Form 1099-K reporting threshold of $20,000 was a cause for concern for some who worried about a lack of reporting compliance. The fix from Congress in 2021 was a lower $600 threshold amount for Form 1099-K set to take effect in the 2022 tax year, meaning forms that would be distributed in early 2023. However, under pressure from business groups and an IRS that wasn't yet prepared to deal with the volume, 2022, 2023, 2024, and 2025 were treated as transitional years. Without any changes, for the 2025 tax year, the reporting threshold is $2,500. Starting in 2020, there was another yet change to Form 1099-MISC. The IRS brought back Form 1099-NEC, Nonemployee Compensation, to report payments of nonemployee compensation (NEC) previously reported in box 7 on Form 1099-MISC. That means that independent contractors and gig workers now receive Form 1099-NEC, not Form 1099-MISC. (Form 1099-MISC is still used to report attorney payments, royalties, prizes and awards, and some rents.) The reason for the change in reporting threshold has been touted as increased compliance. According to the IRS, tax gap studies have consistently demonstrated that third-party income reporting significantly raises voluntary compliance with tax laws. For example, computerized document matching in the early 1980s—where the IRS matched data reported by third-party financial institutions to data reported by taxpayers—significantly reduced underreporting of dividend and interest income. And the 1987 requirement that taxpayers supply Social Security numbers for dependent children resulted in a marked difference in the numbers of dependents claimed on returns—seven million fewer dependent children were claimed than in the previous year. For the 2025 tax year, the IRS requires third-party networks, such as payment apps and online marketplaces, to issue Form 1099-K if the aggregate payments received by a payee exceed $2,500, regardless of the number of transactions. That's a step towards the $600 threshold created under the American Rescue Plan Act of 2021—that's slated to take effect in 2026. It's still the case that no threshold applies to payment card transactions—payment cards include credit, debit, or stored value cards such as gift cards. Also, for the 2025 tax year, the IRS requires those who pay independent contractors $600 or more to file Form 1099-NEC, Nonemployee Compensation, to report those payments. (The $600 threshold has never been adjusted for inflation. However, if cost-of-living adjustments had been made each year since 1954—the year that section 6041 of the tax code was introduced—the $600 threshold would now be over $7,170.) Both the House of Representatives and the Senate propose repealing the $600 reporting threshold for Form 1099-K introduced by the American Rescue Plan Act in 2021. That move would restore the previous threshold of $20,000 and 200 transactions for Form 1099-K reporting. And, both the House of Representatives and the Senate propose increasing the $600 reporting threshold for independent contractors or certain other payments reported on Form 1099-NEC to $2,000, adjusted for inflation. House Ways and Means Committee Chairman Jason Smith (MO-08) said, about the change, 'The current IRS subcontract labor reporting requirements are as out-of-date as they come. Increasing the threshold at which small businesses have to file a form with the IRS will be a potent regulatory relief for Main Street.' The Coalition for 1099-K Fairness, an organization founded by eBay, Etsy, Mercari, OfferUp, Poshmark, Reverb and Tradesy in response to the changes in the American Rescue Plan Act of 2021, said about the change, 'The Coalition for 1099-K Fairness strongly supports the Senate Finance package's inclusion of language to raise the 1099-K reporting threshold. This commonsense provision would increase the threshold to over $20,000 in total payments and more than 200 transactions per calendar year—effectively stopping the implementation of a burdensome $600 threshold, regardless of transaction count, scheduled to take effect in 2026 under the American Rescue Plan Act (ARP).' If the reporting rules change, that should mean fewer forms for taxpayers. In 2023, the IRS estimated there could be up to 44 million Forms 1099-K sent to taxpayers (the official IRS projections—released in September 2024—suggested that the numbers were much smaller because of the delayed implementation of the $600 reporting threshold). The U.S. Bureau of Labor Statistics reports that the number of self-employed individuals is around 16.5 million, representing approximately 10.4% of the total workforce. That doesn't necessarily translate into 16.5 million Forms 1099-NEC since some self-employed workers don't receive any forms while others may receive multiple forms. But it's clear that changing the reporting threshold will impact millions of taxpayers. Regardless of the reporting threshold, all taxable income, including income earned through payment apps and online marketplaces and income earned from side gigs and contracting jobs, must be reported on your tax return.
Yahoo
11-06-2025
- Business
- Yahoo
Yellow Springs' state audit lists $19K penalty; Matt Dillon blames IRS, village
Jun. 10—The Ohio Auditor of State issued a finding for recovery of nearly $20,000 Tuesday against several former Yellow Springs officials who failed to pay federal tax withholdings on time, as well as late fees and penalties. The Ohio Auditor's Office issued a finding of recovery for $19,512.40 for fiscal year 2023, the vast majority of which is attributed to former village finance director Matt Dillon. Dillon left the position in 2022. Auditors found that Dillon "failed to timely remit payroll withholdings and filings to the federal government, leading to late fees, penalties, and interest," the majority of which would have been avoided had filings been on time, auditors said. Former village manager Josue Salmeron and former finance director Amy Kemper were also implicated in the report, but on a much smaller finding: Salmeron was deemed responsible for $156.95, and Kemper for $136.13, both of which have been repaid, according to the state. Dillon and his bonding company are responsible for the remaining $19,219.32, auditors said. Reached for comment Tuesday, Dillon said he has been forthcoming with the state's independent auditors, but feels that the nearly $20,000 amount is a punitive amount to be placed on one person for a "clerical error." "I'm a public servant," he said. "I try to be a financial steward, and I take that very, very seriously." The auditor's report shows that the breakdown of the findings for recovery include: — $4,657.30 for late filing of one Federal 941 Form; — $5,002.19 for seven instances of failure to submit withholdings; — $9,520.00 for incorrect filing of one Form 1099; — $332.91 for seven instances of interest for failure to pay IRS penalties. Dillon served as Yellow Springs' finance director for only two years. He added that during that time he repeatedly sought guidance from the IRS as to how to properly complete filings, but received no response, in part due to the effects of COVID on the IRS at the time. "With some of these, like payroll withholdings, we're submitting things without feedback to a black hole," he said. Dillon further alleged that many of the tasks assigned to him in the role had more to do with Village Council's pet projects, rather than maintaining solid fundamentals of bookkeeping. "Yellow Springs is the type of town that comes up with lots of extracurricular municipal activities that are beyond the basics. Like, 'Hey, let me just do what I need to do,' which is to make sure our taxes are good." Dillon said he is looking into his options to appeal the monetary charge. Leadership for the village of Yellow Springs did not return a request for comment Tuesday.
Yahoo
03-06-2025
- Business
- Yahoo
PennantPark Floating Rate Capital Ltd. Announces Monthly Distribution of $0.1025 per Share
MIAMI, June 03, 2025 (GLOBE NEWSWIRE) -- PennantPark Floating Rate Capital Ltd. (the "Company") (NYSE: PFLT) declares its monthly distribution for June 2025 of $0.1025 per share, payable on July 1, 2025 to stockholders of record as of June 16, 2025. The distribution is expected to be paid from taxable net investment income. The final specific tax characteristics of the distribution will be reported to stockholders on Form 1099 after the end of the calendar year and in the Company's periodic report filed with the Securities and Exchange Commission. The Company, which operates as a regulated investment company ('RIC'), generates qualified interest income and short-term capital gains that may be exempt from U.S. withholding tax when distributed to non-U.S. stockholders. The U.S. tax law permits a RIC to report the portion of distributions paid that represents interest-related dividends as exempt from U.S. withholding tax when paid to non-U.S. stockholders with proper documentation. The specific tax characteristics of this distribution can be found on our website ABOUT PENNANTPARK FLOATING RATE CAPITAL LTD. PennantPark Floating Rate Capital Ltd. is a business development company which primarily invests in U.S. middle-market private companies in the form of floating rate senior secured loans, including first lien secured debt, second lien secured debt and subordinated debt. From time to time, the Company may also invest in equity investments. PennantPark Floating Rate Capital Ltd. is managed by PennantPark Investment Advisers, LLC. ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC PennantPark Investment Advisers, LLC is a leading middle market credit platform, managing approximately $10 billion of investable capital, including potential leverage. Since its inception in 2007, PennantPark Investment Advisers, LLC has provided investors access to middle market credit by offering private equity firms and their portfolio companies as well as other middle-market borrowers a comprehensive range of creative and flexible financing solutions. PennantPark Investment Advisers, LLC is headquartered in Miami and has offices in New York, Chicago, Houston, Los Angeles and Amsterdam. FORWARD-LOOKING STATEMENTS This press release may contain 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports PennantPark Floating Rate Capital Ltd. files under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. PennantPark Floating Rate Capital Ltd. undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made. The information contained herein is based on current tax laws, which may change in the future. The Company cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in this material does not constitute any specific legal, tax or accounting advice. Please consult with qualified professionals for this type of advice. CONTACT:Richard T. Allorto, Floating Rate Capital Ltd.(212) in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Miami Herald
02-06-2025
- Business
- Miami Herald
The most tax-friendly states for your retirement income
In retirement, you'll likely need to replace about 40% of your pre-retirement income from sources such as IRAs, 401(k)s, and employer-sponsored pensions. That's generally what it takes to sustain a lifestyle comparable to the one you enjoyed while working. Given that, it's worth carefully considering where you live in retirement – especially since some states tax these income sources heavily, while others offer full or partial exemptions. Choosing a tax-friendly state could help your retirement savings go further. This article is part of an ongoing series examining how states tax various sources of income, including Social Security benefits, retirement account distributions, defined benefit pensions, investment income (capital gains, dividends, interest), earned income, pass-through income (K-1), rental income, and other income typically reported on Form 1099. In this installment, we focus on which states are most tax-friendly when it comes to income from retirement accounts and pensions. Don't miss the move: Subscribe to TheStreet's free daily newsletter Image source: Olegs Jonins on Unsplash The tax treatment of retirement and pension income varies significantly across states, according to Tim Bjur, a senior content management analyst at Wolters Kluwer. Broadly speaking, states fall into one of four categories: Some impose no state income tax at exempt all or some retirement income.A few offer tax credits for retirement some tax all or most of it. Bjur notes that while states typically introduce numerous bills each year to reduce the tax burden on retirees, no significant changes have been enacted since 2023. That year, two notable updates occurred: Michigan began phasing out its complex three-tier retirement income tax structure, which was based on birth year and federal adjusted gross income (AGI), with capped deductions for Tiers 2 and Island raised the exemption cap on retirement income to $50,000, effective in the 2025 tax year. A few states also made minor adjustments to military retirement income tax rules by expanding eligibility to more branches of the armed forces. Why the pause in broader tax reform? Bjur believes it's tied to uncertainty about federal tax policy and its potential impact on state revenues. Still, he points out that some states – like Kansas, which taxes most retirement income – are pursuing general income tax cuts that could benefit retirees, even without specific changes to retirement income taxation. Related: How the IRS taxes Social Security income in retirement Nine states do not tax individual income, including retirement income: AlaskaFloridaNew HampshireNevadaSouth DakotaTennesseeTexasWashingtonWyoming Four states exempt all or most retirement income: IllinoisIowaMississippiPennsylvania Twenty states offer partial exemptions or deductions, often with AGI-based phaseouts: AlabamaArkansasColoradoConnecticutDelawareGeorgiaHawaiiKentuckyLouisianaMaineMarylandMichiganMissouriNew JerseyNew YorkOklahomaRhode IslandSouth CarolinaVirginiaWisconsin Fourteen states and the District of Columbia tax most or all private retirement income: ArizonaCaliforniaDistrict of ColumbiaIdahoIndianaKansasMassachusettsMinnesotaMontanaNebraskaNew MexicoNorth CarolinaNorth DakotaVermontWest Virginia Three states offer tax credits for retirement or pension income: OhioOregonUtah Some states offer full or partial exemptions for: · Military retirement pay (e.g., Hawaii, Indiana, Oklahoma: fully exempt) · Federal government pensions (e.g., Maryland, Kentucky: special exemptions) · Railroad Retirement Benefits (exempt in nearly all states) By way of background, 26.3 million retired Americans - and their beneficiaries - received pension income from public and private sector plans in 2022, according to the National Institute on Retirement Security. Meanwhile, IRAs continue to play a pivotal role in retirement savings. By mid-2024, 57.9 million U.S. households - about 43.8% - owned IRAs, according to the Investment Company Institute. Among households with traditional IRAs, 31% took withdrawals in tax year 2023 - and 90% of those were retired. Of these retirees, approximately 73% withdrew only the required minimum distribution - or RMD. According to J.P. Morgan Asset Management, you'll likely need to replace around 40% of your pre-retirement income from sources like IRAs, 401(k)s, and employer-sponsored pensions. That's typically what's needed to maintain a standard of living comparable to what you had while working. JP Morgan Jean-Luc Bourdon, a wealth advisor with Lucent Wealth Planning, notes that pension income offers limited tax-planning flexibility. As a result, moving to a more tax-friendly state is often one of the most effective ways for pensioners to reduce their tax burden. In contrast, IRA and 401(k) holders have more options: Qualified Charitable Distributions (QCDs) can reduce the tax impact of Required Minimum Distributions (RMDs).Strategic Roth conversions during low-income years or market downturns can help manage long-term tax liability. For those considering relocation, Bourdon suggests targeting low-tax states that offer additional lifestyle benefits. "Arizona, for instance, combines a favorable flat 2.5% income tax rate with abundant sunshine," he said. Related: These are the most tax-friendly states if you work in retirement Arizona Retirement - Tax-Friendly Affordable Living. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Time of India
24-05-2025
- Sport
- Time of India
What You Need to Know About MLB's Twitter Sweepstakes Rules
A lot of fans join MLB's Twitter sweepstakes to try to win game tickets and souvenirs, but knowing the official rules is necessary for success. The league's regulations allow for many promotions during the season, such as the Ultimate Game Giveaway Sweepstakes and contests on Twitter. Tired of too many ads? go ad free now Promotional prizes include anything from twenty-five to five hundred dollars, and certain packages offer Major League Baseball game tickets and gift cards. Nevertheless, participants have to follow all the requirements and content rules to make sure they don't get eliminated from these contests. Major League Baseball sweepstakes eligibility and entry requirements Only people living outside of Quebec, Canada, are eligible for Major League Baseball sweepstakes, but those from the United States territories and commonwealths are welcome to join. People entering the contest must be eighteen years of age, but some areas require them to be older. Employees at Major League Baseball, including the Commissioner's office and all thirty teams, are not allowed to participate with their families or those living in their homes. Promotions sometimes require users to enter with a Twitter retweet, but some also allow people to enter by filling out a form online. The Ultimate Game Giveaway Sweepstakes ran for seven different entry periods during the 2023 season, and participants had to retweet special Major League Baseball Twitter posts. Those who win will get two game tickets and a one-hundred-dollar Walmart gift card, but they must still pay for their own trip and accommodations. Content restrictions and legal obligations for participants Major League Baseball prevents any nudity, gambling talk, profanity, promoting violence, using copyrighted material, and public mentions that tarnish baseball or Major League Baseball organisations. No participants should include tobacco, alcohol, drugs, dangerous stunts, or real weapons, and content that promotes discrimination based on race, gender, religion, nationality, disability, sexual orientation, or age is not allowed. Tired of too many ads? go ad free now The league needs parental releases for all content that involves minors who are not yet legal adults. Every dispute over a sweepstakes must be decided by binding arbitration in New York County, New York, and participants give up the right to join a class action lawsuit. Winners who get a prize worth over six hundred dollars may receive a Form 1099 from the Internal Revenue Service. All sweepstakes decisions and rules are guided by Major League Baseball Advanced Media Limited Partnership from its headquarters in New York. Also Read: Major League Baseball's Twitter sweepstakes continue attracting thousands of participants despite complex regulations, offering fans unique opportunities to experience live baseball while navigating detailed legal frameworks designed to protect the league's interests and ensure fair competition among contestants.
