Uncle Sam Gives Online Sellers a Break from His Snooping

Plus: How to Keep the QBI Deduction Alive!

Hi there,

We hope you got to spend some quality time with friends and family last week. As we gear up for the last few weeks of business before 2023 signs off, here’s 3 tips to get you on your way:

1) IRS Delays Tax Rule for Online Sellers— Again. 

If you make some bucks by selling stuff online, you can breathe a sigh of relief. Uncle Sam has decided to postpone his plan to spy on your earnings and send you a bunch of forms. The plan, which was cooked up by Congress in 2021, would make online platforms like eBay, Venmo and Ticketmaster snitch on you if you make more than $600 a year. This could result in a flood of Forms 1099-K in your mailbox and Uncle Sam’s inbox, making your life harder.

Uncle Sam changed his mind after hearing a lot of complaints from tax pros, business groups and taxpayers. He said he will wait until 2024 to start his snooping, and he will be more lenient in the first year. He also asked Congress to rethink the $600 limit, which many people think is too low.

Comedy Central Reaction GIF by Broad City

2) Petition for QBID.

The Qualified Business Income Deduction, a tax cut that was part of the 2018 Tax Cut and Jobs Act, is set to sunset in 2025.

It’s a little more complicated than I’m going to describe it since there are phase-outs and limitations, but in general this is a 20% deduction that is applied to either a Sch C or pass-through business’s net profit, lowering their taxable income by 20%. This was passed in order for these businesses to benefit from a tax break alongside corporations who had their rates slashed from 35% to 21%.

The NFIB (National Federation of Independent Business) currently is lobbying to extend this tax break - and has a petition with over 25,000 signatures - and is looking to add more if you’re interested.

3) Do I Need an EIN?

If you’re operating a business, I highly suggest obtaining an EIN (Employee Identification Number). This becomes your business’s identifier and is in lieu of using your Social Security Number (which I personally wouldn’t want floating around on W-9s).

So how do you get one? You can obtain one for free at the IRS’s website in about 5 minutes. It’s important to note - if you also plan to incorporate or set up an LLC, do that first since you’ll need to provide the name of your company when you register for the EIN.

After applying, you’ll get an immediate EIN confirmation which you’ll need to save in your records.

What happens if you lose your EIN? No worries! Just call the IRS at 1-800-829-4933 during their regular business hours, and after verifying some business information, you’ll be able to obtain the number again.

See You Next Week

Your Accountable Advisor