The press is starting to cover the tax provisions in the “housing” bill that Dubya just signed.
The Wall Street Journal highlights the part that requires on-line payment processors like PayPal to file informational returns for anyone who has received at least 200 payments, or any number of payments that total at least $20,000.
They note that this may surprise some people who started out by selling things on eBay garage-sale-style, but who over time have found themselves with a side-business.
Their recommendation: take it seriously, start keeping records, and keep a lookout for opportunities to take advantage of tax deductions.
The Washington Post takes a broader look at this
part of the bill, which applies not only to on-line payments via PayPal and
such, but also to credit card payments processed through MasterCard, Visa, and
their ilk. The Post notes that there’s
a lot of opposition to this
among groups representing small businesses and the self-employed, and notes
…card processors will have to verify a business’s Taxpayer Identification
Number. If the processor fails to do that or has an incorrect
the processor is required to withhold 28 percent of the money due to the
business while the situation is resolved.
Presumably this applies not only to credit and debit card processors, but to
all of the information-reporting entities (such as YouTube) targeted by the
Kristie Darien of the National Association for the Self-Employed “is concerned
use the data to create industry profiles, using the total credit card receipts
from a particular business sector to calculate industry averages. ‘Are they
going to say all dry cleaners in the Northeast have this amount of credit
cards so they should have this amount of cash and if you deviate we’re going
to flag you? In reality, it’s dependent on the business. Maybe the business
doesn’t want to take credit cards because it doesn’t want the fees.’ ”
FOXBusiness looks at some of the other tax provisions in the bill, including some that might potentially be of use to some people trying
to get below “the tax line.”
There’s a new refundable tax credit for people who buy their first home. The
credit can get you a tax refund as high as $7,500. There are some catches,
though: First off, this is a temporary provision and will expire in a couple
of years, so you have to buy that home quickly. Secondly, the credit isn’t a
giveaway, but a loan that you have to then pay back slowly over the next 15
tax years. It’s a 0% loan, so still a pretty good deal as those things go, but
as this will effectively increase the tax you owe for 15 years, it isn’t
particularly useful to people who want to eliminate their tax liability.
Another element of the bill gives an above-the-line tax deduction for some or
all of the property tax you pay (formerly you had to itemize to get any
deduction for property taxes). Above-the-line deductions reduce your adjusted
gross income, which reduces the tax you owe and also can help you qualify for
other deductions and credits.