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Where e-filing information return forms comes full circle. We support 1099, 1098, W-2, and Affordable Care Act forms.

Archives for June 2022

4 More Reasons You Should Use an IRS-Authorized E-file Provider

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A few years ago, we featured an article on our blog with 7 benefits of using an online and authorized e-file provider. We wanted to share some more great reasons to use a trusted and IRS-approved service when it comes to storing and filing your information return forms. Safety & Assurance – Your Data Is Well-Protected by a Trusted Provider In order to become an authorized e-file provider for the IRS, businesses like eFile360 must complete an application process. That application process is aimed at authenticating our business and the people who run it, in order to ensure that your tax information is going to be safe with us. Once the application is complete, the final step in the authorization process is to pass a suitability check. The IRS conducts this check themselves. The suitability check often involves a credit check, tax compliance check, criminal background check, and a thorough check for any prior non-compliance with IRS e-file requirements. If the last few years have taught us anything, it’s that we need safe and effective ways to do business online (even with sensitive information). And with cybersecurity threats on the rise, it’s important that you trust your tax information to a firm that is dedicated to safeguarding your data year after year. Elevated Expertise As an authorized e-file provider, eFile360 has proven its mastery of the information return filing system and we also bring our own team’s experience to the table for you to benefit from. Sometimes, the self-service option seems like the easiest or cheapest option, and we offer that as well. But more often than not, there are always one or two outliers while you’re working through your information returns. Maybe you’re not sure if an employee’s retirement distribution is with or without exceptions, or you’re still a little unsure about when you should use a Form 1099-NEC versus Form 1099-MISC. You could try to sift through the IRS instructions or hope that their call …

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Form 1099-R: What Is My Business’s Role in Filing?

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We'll discuss what the Form 1099-R is and what role a business plays in its filing and reporting. What is Form 1099-R? Form 1099-R is an IRS information return that reports specific types of taxable non-employment income that taxpayers may receive outside of their regular pay or salary. Form 1099-R is used to report the withdrawals or distribution of $10 or more for the following: Retirement and profit-sharing plans IRAs – individual retirement arrangements Annuities, pensions, insurance contracts, survivor income benefit plans Disability payments (permanent and total) under life insurance contracts Charitable gift annuities Retirees are the most common recipients of Form 1099-R, but people who are currently employed may also get them for a host of different reasons. Who Files Form 1099-R? It is the employing business’s responsibility to file Form 1099-R – though, most often, the 401(k) plan manager or custodian for your organization will be the one who files this form with the IRS and then sends your employee a copy. Who Receives Form 1099-R & Why? Any and all of your employees who receive a retirement plan distribution in the amount of $10 or more should receive this form. There are some other situations that warrant a 1099-R as well, so let’s go through some of those. Those individuals who took out a loan from their employer-sponsored retirement plan, but were unable to pay it off in time, should receive a Form 1099-R as well. They’ll also receive a form if they took out a loan but left your company before they finished paying it off. There are several reasons an employee could receive a retirement distribution, and those reasons are marked individually on the form. For example, if an employee receives a distribution for more than one reason, you or your retirement plan manager or custodian will need to file a separate form with each appropriate code (there is no way to report multiple codes on a single form). Here …

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New 1099-K Rules Will Begin in 2022

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We mentioned in this eFile360 article that the 1099-K threshold is changing in 2022, now we want to dive into the details and talk about what that change means for individuals and businesses. Here’s the latest news on the new 1099-K rules. 1099-K Rules: New Threshold Starting in the tax year 2022. The new 1099-K rules include a much lower threshold at which third-party payment entities will have to prepare and send out a Form 1099-K. These third-party or “payment settlement entities” include businesses like banks and any other organization that processes credit card transactions on the behalf of another merchant and then makes interbank transfers of funds from a customer to the merchant. This also includes third-party payment apps like PayPal, Venmo, Zelle, CashApp, Uber, and more. Previously, the threshold required these entities to only send out a Form 1099-K if they handled more than 200 transactions during the calendar year with a total gross amount of more than $20,000. But now, a section in the American Rescue Plan Act (ARPA) has amended these thresholds to $600 and no minimum transaction number, respectively. That means there will be a huge uptick in the number of 1099-K forms that these entities will be responsible for. Exceptions to the New 1099-K Threshold It’s important to note, however, that these transactions only count toward the new 1099-K threshold if they are “reportable third-party network transactions.” These reportable transactions include payments made for goods and services, not those made as personal gifts or reimbursements. So, if you own a coffee shop and your customers pay through a third-party entity, those transactions (after the $600 threshold) will need to be included on your Form 1099-K, but that money you sent to your friend because they paid your half of the dinner tab last week is not reportable. Cautions & Criticisms It’s worth noting that if you or others in your life often use these third-party …

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How Cryptocurrency Investments Affect Your Taxes

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The rise of cryptocurrency has many people wondering how it can and will affect their tax filing. Let’s go through some of the ways crypto investments could show up next year on your tax forms. Virtual Currency and Cryptocurrency Since 2014, the IRS has treated virtual currency as property, for Federal income tax purposes. According to the IRS Notice 2014-21, virtual currency “is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.” Virtual currency can be used to pay for goods or services, or it can be held for investment purposes. Similarly, cryptocurrency is a type of virtual currency that “uses cryptography to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain.” Right now, Bitcoin and Ethereum are some of the most popular cryptocurrencies, but there are thousands of different ones moving through markets across the globe. Cryptocurrency’s boon in popularity can be attributed in part to its safety – each transaction is specially encrypted and recorded on a digital ledger (blockchain) that is reviewed and approved by every member in the network. Basic Cryptocurrency Tax Liability As for your cryptocurrency tax liability, the classification of crypto as property means you may have to pay taxes on your holdings. And because of the rise in popularity in cryptocurrency transactions, the IRS will be looking to enforce the reporting of these assets more and more in the coming years. IT’S also important to remember that the different transactions you enter into with cryptocurrency – buying selling, swapping, mining, and more – may be treated differently by the IRS and on your tax returns. Let’s take a look at some of the ways cryptocurrency tax liability is handled by the IRS. Crypto Transactions and Their Tax Implications: Buying, Selling, & Swapping Every trader’s cryptocurrency tax situation is a bit different, but most of these …

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