1099-K Merchant Card and third party payments

[cientax]

Client received a few 1099-K's from credit card companies showing what they paid in merchant fees. I know Sch-C says not report these payment for 2011 but client never told me about these during the year and were never included on sales tax reports as Total Income even though not subject to sales tax. but do we now have to include these payments as income on the Sch-C Gross receipts? Line 1 Sch-C is confusing me. Thanks.

[rfassett]

Schedule C and the other business forms say not to report the 1099-K separately for 2011 (and maybe forever) but that does not mean do not report them. They should be included in gross receipts. And if your client is not reporting those to you with their monthly or quarterly info for sales tax reporting, you need to have a talk with your client. As far as Line 1 of the Schedule C being confusing, just ignore the parts about the credit cards and just report gross receipts as you always did.

[Terry D EA]

<<<<<<Client received a few 1099-K's from credit card companies showing what they paid in merchant fees.>>>>> Fees for credit card processing paid to the credit card processing company are expenses and not income if that is what you are saying. The 1099K form is to report income from taking credit cards as a form of payment for services provided which is taxable and subject to SE tax. The sales from credit cards are subject to state sales tax and I agree you need to speak to your client about that as well. Include any payments received from credit card processing in gross receipts for this year.