HELP! I’m not sure how to report my credit card income!

As a merchant, you do not have to report credit card income if it less than $20,000 for the year and the total number of transactions is less than 200.

However, banking institutions and other financial service providers must report the total gross amount for credit and debit cards for the year for every merchant. So, this means, that as a business owner who accepts payment by credit cards or debit cards, it is vital that you reconcile the monthly bank statements with your books. Any discrepancies between the banks records and your records must be found and settled before your tax returns are filed.

This information will be filed on a 1099-K, which is similar in looks to the 1099.  You should have an accurate and thorough bookkeeping system in place to help separate net amounts into gross receipts and associated fees and refunds.  With accurate bookkeeping, transitioning this information onto Form 1099-K will be pretty much hassle-free.

If you are unsure of how this effects your business and bookkeeping, please contact your accountant.

David W Huff, CPA, PFS, MS is a partner at Person CPA Group. He provides clients with tax preparation and consulting services, accounting services, retirement plan and benefit consulting, accounting software technical support and training, and management advisory services. His specialty is helping new businesses organize their operations to maximize tax savings and move quickly from start-up to profitability.  You can reach David by email at: david@personhuffcpa.com