If you are a small business selling ebooks, promoting affiliate products or selling merchandise online in 2012 you’ll need a 1099k to keep the IRS happy.
As of 2011, payment networks such as PayPal, Amazon, eBay as well as credit card processors and banks are required to report all card payments, among others, made to merchants for goods and services.
These payment processors must send out annual 1099-K forms to any small business that sells more than $20,000 or has more than 200 payments with one payment processor.
The Internal Revenue Service (IRS) ruling that created the 1099-K was enacted as part of the Housing and Economic Recovery Act of 2008.
For 2011, small businesses need to make sure that the total of the 1099-K plus all other 1099s received do not exceed the income they report on the business tax return.
Check out the infographic below for information about the 1099k Tax Form.