Sunday, February 5, 2012

Take Charge of Your Federal Income Taxes Including Form 1099-K

W-2 forms and 1099's for filing federal income taxes are in the mail, if yours haven't already arrived. You'll have all the income information to file your federal income taxes soon, but you may still need to add the income figures and make a few calculations.

You DO file your own federal income taxes, don't you? If not, you're paying someone to put figures in the blanks, and you provide the figures. The IRS has free filing through their website at, but if you operate a business, you may need to purchase a tax software program such as TurboTax or TaxAct. The Home and Business version walks you through your Form 1040, Schedule C for your business and Schedule SE for your self-employment taxes -- Social Security and Medicare.

The federal tax laws have changed a little this year, and there is no Making Work Pay credit. The filing date without an extension is April 17, because April 15 falls on a Sunday and Monday is Emancipation Day in DC.

You'll need to break down your mileage from January to June 30 and from July 1 to December 31 if you want to claim mileage for your business activity. Mileage is calculated at 51 cents for the first half of the year and 55.5 cents for July to December.

The IRS has a new Form 8949 for capital gains. Complete this form to transfer your capital gains information to Schedule D. If you got a Form 1099-B, it may have the basis figure you need to complete the Form 8949.

Form 1099-K is new, and comes from merchant payment centers such as PayPal. If you received more than 200 payments through a merchant payment center during the 2011 year totaling more than $20,000, you will likely receive this form. Because you may also receive a Form 1099-MISC for contract work, be aware that there may be duplication of the amounts. You don't want to pay taxes on this income twice. Fortunately, the IRS has waived calculations for this year, and the 2011 Form 1040 tells you to put "0" in the blank.

Don't concern yourself about discrepancies in the Form 1099-K and your actual income for this year. Just put a zero in the blank and move on, because you can't likely reconcile the figures -- and you don't need to. Count all of your income on your federal income tax form, but only count it once.

The IRS requires businesses to send you a 1099-MISC if you work as a contractor and earn more than $600 during the year. If you earn less than $600, you must still count that as income, although you don't get a Form 1099-MISC.

Claim all of the deductions you are allowed, including mileage, advertising and supplies. And Internet expenses, if you work online. It's only with claiming all of your deductions that you can see if you make a profit from your business efforts.  

Do your taxes yourself and treat yourself when you're done. You'll save a significant amount of money and you may learn some tax law along the way. Everything you need is available on the IRS website. Here's the information you need from the IRS about Form 1099-K. 

An article with another perspective on this year's tax changes is Tax Changes to Watch For by Eva Rosenberg.

Sometimes an eagle watches over you, and sometimes it's a hawk. We don't have a picture of an eagle, although my daughter swears she'll get us one. Here's the red shouldered hawk we see in our area often.
Such a stately bird, we enjoy his company. Get your federal income taxes done and soar ahead of the crowd.

We got a new book published. This one is Retirement Living Guide Tips and Recipes for Easy Cooking
You can also read part of the Retirement Living Guide Tips and Recipes for Easy Cooking or download a copy for $2.99 on Kindle at Amazon.

Our previous book, Retirement Living Guide for Senior Citizens, is still available on Smashwords or Kindle.

See you SOON!