Piano World Home Page Forums Our Most Popular Forums Piano Teachers Forum New USA tax reporting requirement

Yes, they have. I get asked to fill out W9s from a number of businesses that think they might pay me $600 a year, and I get 1099s from them if I do get paid that much.

The only expense I can think of that would get anywhere near the $600 mark is my piano technician or if I were to purchase a new instrument.

Yes, those are for services, I bet. The new part here is for merchandise. That hasn't required a 1099 before.

Cathy

Is it just merchandise, or ANY expense over $600?



For example, my son claims travel expenses. Will he have to send forms to airlines? It does say "person" - does that mean individuals only, not businesses?

The other new part is that they need to be sent to corporations. Currently it's only services provided by non-corporations.

So, yes, as it stands, without the regulations yet, one would have to send them to hotels, airlines, music stores, etc, which previously didn't need to have them sent.

Cathy

My point was the added cost my accountant would charge me for the 1099s. I believe they charge per form.

I believe this is why so many are upset. We already have an extremely inefficient and overly complicated system, now the government wants to make it even more inefficient and complicated. If this passes I likely won't be directly affected because I'm not self-employed, but I can see why many are upset. Its just one more step to go through that's really not nescesary.

IMO that's representative of how you've approached this subject, and not a very good comment on it.

It's not hard at all to see that this thing wouldn't apply to your "washer and dryer." It didn't sound right to me, and it prompted me to look into it. It took about one minute (literally) for me to see what the story was -- i.e. to confirm that you were off base.

And really that's how you've approached this whole discussion which you started. You seem not to care enough about the details, nor about finding out one way or the other. It's not much different than shouting "FIRE" in a crowded theater, before having much idea of whether there's anything to shout about.

Some people have recognized your approach as such. Too bad not everyone did.

I don't think so.....
[edit: I see that you corrected this in a later post. Good job!!]

BDB gave a good reply:

......but in any event, we agree on the basic point (as you went on to say): that it only applies to business transactions, which means that John's worry over the "washer/dryer" is mistaken.


Would that more people took the trouble to do that with their stuff too!

From what I can tell, there's more misinformation than information. But it looks like people are getting that.

What I read was that the law has been passed, and it is now up to the IRS to formulate and receive comments on how it will be implemented. If the purpose is to provide a paper trail between the buyer and the seller, it would be reasonable to accept credit card statements in lieu of 1099 reporting, and that is something that we could ask the IRS to do.

In any case, it is not likely that this will be burdensome on most minuscule business like piano teachers. You will not need to give a 1099 to a private party used piano seller, as that is not a taxable transaction. You may need to give one to a dealer. If you are regularly selling piano benches or music to your students, you already have a tax headache: you should have a resale permit and a license to do so, although if you are just acting as an agent for the sale, and not taking any profit from it, there should be no such requirements.

I have always recognized that there is paperwork that goes along with running a business, and I appreciate the fact that it can be far out of proportion to the amount of money that is involved. It is especially difficult for me, when I think of all the time I have spent on it and the money that I paid from it, and now that I am making most of my money from investments, I rarely pay any income tax other than Schedule C (Social Security) on far more income than I used to make. I had been doing my mother-in-law's taxes, and it bothered me that she paid more than I did even though she had a fraction of the income. That bothers me far more than a little more paperwork.

Mark, I do hope you're a bit more polite to your patients than your posting here would indicate.

I'm busy teaching and between students, I can post. Apparently, you think every one should hire a tax accountant and lawyer, investigate every possible implication of a new law, before saying anything. Or, we can post what we've heard, and let others with more time/expertise dig in and find out.

As I've said, I've notified MTNA, our professional organization here in the USA, and asked their legal consul to look into the matter and advise teachers.

Further, teachers entering the field can use this information to evaluate whether they want to continue down the path as an independent studio owner, or go another route; we do have elections coming up soon, and perhaps some studio owners may want to voice dissatisfaction with government overreach in the only way politicians seem to understand.

Wishing you a good day and weekend.

John, I appreciate you bringing this to my attention, and would like to know what MTNA has to say about it. I'm sure since it's pretty new information that like everyone else, they're trying to sort it out and perhaps waiting to see how the IRS decides to implement this.

...but but but....we're "creating" jobs. More paper-pushers at the IRS....

John, I've been far more polite to you than you have deserved.

You came on here with sloppy incorrect stuff and you've been spreading hysteria over it, plus some political aspersions. When things have been pointed out to help you correct and clarify the story, you have almost entirely rejected it, and you've just tried to take your misguided, false, and exaggerated points even further.

It's a credit to this site and its membership that they haven't let themselves be taken too far down that path with you.

As far as I can determine, my original post stands as correct. It's what CNBC reported. And one doesn't define hysterical as voicing displeasure with adding additional and unnecessary reporting requirements.

OK.
Since you're sounding reasonable let's see.

Are you willing to say that much of what you have said simply doesn't apply?

I didn't view John's posts as "spreading hysteria." While I think that the practical impact of the new rules on piano teachers will be small, for other sectors (such as, egocentrically speaking, the coin business) the time/money involved in complying with the regulations will be enormous, unpleasant, and could even make some small businesses go under.

The new code permits the IRS some wiggle room in how the rules are implemented. For example, they apparently intend to exempt credit card purchases from the reporting requirements, so an easy way to avoid having to file the 1099s would be simply to pay for everything with credit cards. That will work for certain small businesses (including piano teachers, I imagine) but not others.

Another troubling aspect about this mess is that some people are predicting that the new rules will have an adverse effect on small, locally owned businesses. Because the rule requires one 1099 form per vendor, people may decide to minimize paperwork by purchasing most of their stuff from a few very large companies (amazon, Office Depot, etc.) rather than shop around and purchase from smaller, more specialized local companies.

The IRS has invited public comment on the legislation. I have no idea whether they'll read it or respond to it in any way, but those of you who feel strongly about the issue should feel free to offer input. Here's the IRS document soliciting comments:

http://www.irs.gov/pub/irs-drop/n-10-51.pdf

Scroll down to the bottom of p. 4 to find the 3 ways in which comments can be submitted.

Mark,

You know, you're on a piano teacher's forum, and we musicians are notorious for having a flair for the dramatic, hyperbole and exaggeration. It's our stock in trade. After all, artists are not cold and clinical. I might ask what did you really expect?

If you're looking for the highly analytical, you might try a tax preparers forum or even, I suppose, a clinical psychologists forum (although I can see how they might get into some heated discussions).

At this point, all I know for certain is that many of us teachers are now going to have to prepare form 1099s which we didn't have to prepare before. If Monika is correct, and I sincerely hope she is, and our credit card purchases will be exempt, then Amen. However, that's a separate issue - and a scary one at that, that the US Government is watching our credit cards. We can leave that topic to the Freedom forums.

I do know that many of the piano teachers in our community are north of 65 and are not computer literate. Whether they still do their taxes themselves or pay to have a tax preparer do it, I don't know, but either way, this will be an added burden.

Discussion and feedback mean a lot more now than they will when it's a done deal and there's nothing we can say or do to change it. I'm grateful to John for bringing up the topic, and for others - on all sides of the issue - for the discussion, insight, and opinions. I don't see any hysteria - just folks who see various concerns.

Many musicians are not just teachers; they are self-employed as performers as well. So there will be ramifications outside the studio, too.

Expect? Nothing. I never expect anything anywhere.

Hope? What I would have hoped for was the kind of discussion we're having now (it has gotten way better as we're gone along) -- measured, and with a care for accuracy, a care for not throwing fuel on the fire, and an openness to taking things back, if someone realizes that what they said was wrong.

BTW.....I ought to say that despite my criticisms, I also much appreciate your having brought this up.