CFI's and taxes

It used to be they did the 1099K if you got payments of $20,000 in a year or 200 individual transactions. Now they've dropped the threshold down to $600 as for other payments. You should have been declaring your receipts before even if you were paid in cash. Don't forget to deduct all your expenses off the top on the Sched C.
 
flyingron said:
You should have been declaring your receipts before even if you were paid in cash. Don't forget to deduct all your expenses off the top on the Sched C.
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Yeah, I've read about the 1099 reporting panic in a few places now. Apparently I'm one of the only rubes who is declaring this stuff without a form from paypal/venmo.
 
I'm dead sure I spent more money on my plane than I got in return last year. Over 2K in insurance, the cost of the annual, and the hangar rent. Honestly it didn't even come close to paying for itself since I've actually been too busy with the aerial photography.
 
schmookeeg said:
Yeah, I've read about the 1099 reporting panic in a few places now. Apparently I'm one of the only rubes who is declaring this stuff without a form from paypal/venmo.
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I'm right there with you. Of course I know about people not reporting cash income. But as a CFI, I am paid through Venmo regularly, and I've always claimed it. Even if I wanted to hide income, it's an electronic transaction that generates a record somewhere. So it seems a bad type of transaction to try to hide.
 
Cloudhound said:
So do you also report the sale of your Bose A20 if payment is accepted thru venmo?
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Is the sale of a used headset you sold for less than you paid for it income?

With that said, I am glad the govt is cracking down on tax cheats.
 
It's not just venmo. Any TPSO is subject to it (Paypal, Zelle, even regular credit card processors).
Note some states have mandated reporting at lesser amounts already (MA, MD, MI, VA, VT, MO, IL). Even Uber and Lyft drivers get them.
 
Cloudhound said:
That wasn't the question.

The point is, it will be reported by venmo on the 1099.
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If I understand right from watching the video in the OP, the 1099-K is based on transactions conducted using the "Business" option within Venmo. I would be willing to bet that most Venmo transactions, for CFIs or personal sales of items, are done as a "personal" transaction.
 
RussR said:
If I understand right from watching the video in the OP, the 1099-K is based on transactions conducted using the "Business" option within Venmo. I would be willing to bet that most Venmo transactions, for CFIs or personal sales of items, are done as a "personal" transaction.
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I'm sure the IRS will eventually crack down on that as well.

I know a lot of people are upset at the crack down, but if you are doing business electronically you are technically supposed to be reporting that income.

The part that bothers me is that my wife and I occasionally exchange money through such devices to pay each other back for purchases, etc. Or if her and her co-workers get lunch together, she may pay and they pay her back through electronic means. They say they aren't going to track and tax that...but just wait. Or wait until that becomes a major tool in law enforcement. You friend gets arrested for doing something bad, but you sent him $20 via Venmo for lunch and now they think you are a customer.

Ultimately the government wants to track every transaction between every person, so they can get their piece of the pie and document your every move, and cash makes that nearly impossible.
 
midwestpa24 said:
I'm sure the IRS will eventually crack down on that as well.

I know a lot of people are upset at the crack down, but if you are doing business electronically you are technically supposed to be reporting that income.

The part that bothers me is that my wife and I occasionally exchange money through such devices to pay each other back for purchases, etc. Or if her and her co-workers get lunch together, she may pay and they pay her back through electronic means. They say they aren't going to track and tax that...but just wait. Or wait until that becomes a major tool in law enforcement. You friend gets arrested for doing something bad, but you sent him $20 via Venmo for lunch and now they think you are a customer.

Ultimately the government wants to track every transaction between every person, so they can get their piece of the pie and document your every move, and cash makes that nearly impossible.
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People want convivence, it opens up the door the to LE or other Gov agencies looking into your records. Hackers will find a way to compromise that information and bleed your accounts. So it's a choice to make, convenience or privacy.
 
midwestpa24 said:
Ultimately the government wants to track every transaction between every person, so they can get their piece of the pie and document your every move, ..... .
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Well, not ALL transactions ... if you're related to a politician in either party, you basically have nothing to worry about [e.g. McConnel's wife, Maxine Waters s kid Karen, that chap named Hunter, John Kerry's Kid, Paul Pelosi Jr, Omar's new husband et al]
 
Cloudhound said:
So do you also report the sale of your Bose A20 if payment is accepted thru venmo?
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Depends.
If that headset was used in your business, and you claimed the purchase as a business expense, then yes. I don't know what schedule declining value asset (MACRS) you'd write it down under though, but for something less than $3K you'd probably just take the full accelerated deduction. If you sold it for less than the value it had under current depreciation on the schedule, then you'd write that as an operating loss. IF it sold for more, then of course income.

Imagine trying to find the value of a cow you send to the sale barn after having her in production for 10 years. I just WHAG it.
 
He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.

~ A famous historical American document.

You can pay your taxes like a good citizen, and still believe this to be true…
 
Sierra_Hotel said:
You've got that wrong, it's "deny everything." Don't forget the most important part, "make counter-accusations."
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Yup. If you don’t deny it then the reverse is true, you did it.
 
flyingron said:
It used to be they did the 1099K if you got payments of $20,000 in a year or 200 individual transactions. Now they've dropped the threshold down to $600 as for other payments. You should have been declaring your receipts before even if you were paid in cash. Don't forget to deduct all your expenses off the top on the Sched C.
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Used to be 20k and 200+ transactions, both had to be met.
 
sarangan said:
Venmo, Paypal etc does not absolve your responsibility to pay taxes. To legally avoid paying taxes, you can renounce your citizenship and move to the United Arab Emirates. Probably won't be much free lance CFI business there.
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The US makes it difficult to renounce citizenship too.
 
sarangan said:
Venmo, Paypal etc does not absolve your responsibility to pay taxes. To legally avoid paying taxes, you can renounce your citizenship and move to the United Arab Emirates. Probably won't be much free lance CFI business there.
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You may have to live and work abroad, but there is no need to renounce your citizenship. If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($105,900 for 2019, $107,600 for 2020, $108,700 for 2021, and $112,000 for 2022). In addition, you can exclude or deduct certain foreign housing amounts. I believe that would cover the income of the totality of flight instructors.... Of course to avoid paying local taxes you may have to move to a place like the Cayman Islands, where there are no taxes and where incidentally they are just now starting a flying club and possibly their first flying school :)
 
Dry Creek said:
Depends.
If that headset was used in your business, and you claimed the purchase as a business expense, then yes. I don't know what schedule declining value asset (MACRS) you'd write it down under though, but for something less than $3K you'd probably just take the full accelerated deduction. If you sold it for less than the value it had under current depreciation on the schedule, then you'd write that as an operating loss. IF it sold for more, then of course income.

Imagine trying to find the value of a cow you send to the sale barn after having her in production for 10 years. I just WHAG it.
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Why you needed a headset for a cow in a dairy barn is bit baffling, but you do need to pay the tax on the sale if it was a business expense.
 
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