This is really helpful information everyone! I've been using Payoneer for my freelance work too and had no idea about the $600 threshold change. One thing I'm still unclear on - when the 1099-K gets issued, does it show the gross payment amounts or the net amounts after Payoneer's fees? For example, if a client sends me $1000 but Payoneer takes a $30 fee, does the 1099-K show $1000 or $970? This could make a difference in how I track my actual income versus what gets reported to the IRS. Also, does anyone know if there's a way to see a preview of what will be on your 1099-K before it gets issued? I'd love to reconcile my records ahead of time rather than being surprised when tax season comes around.

Thanks for all the detailed information everyone! As someone who's been using Payoneer for international freelance work, this thread has been incredibly helpful in understanding the new reporting requirements. One thing I want to emphasize for anyone just reading this - even though the 1099-K reporting might seem scary at first, it's actually not changing your fundamental tax obligations. If you've been properly reporting your worldwide income (like the original poster mentioned they were doing), you're already on the right track. The key is just making sure your records are detailed enough to explain any discrepancies between what Payoneer reports and your actual taxable income. Keep documentation for things like personal transfers, expense reimbursements, and any non-income transactions that might inflate the 1099-K amount. I'd also recommend reaching out to Payoneer directly (or using one of the services mentioned here if you can't get through) to understand exactly what they're including in your 1099-K before tax season hits. Better to sort out any confusion now than to scramble in April!

One thing nobody's mentioned yet - what's the actual benefit you're trying to achieve with this structure? If it's just liability protection, there might be simpler ways to structure this. I had a Revocable Trust -> LLC structure for my business initially, and it was a huge headache for taxes. I ended up restructuring to simplify things. If it's for estate planning, have you considered whether a SMLLC owned by one spouse (with appropriate estate planning) might achieve your goals with less complexity? Or potentially an irrevocable trust structure if you're looking for asset protection?

Based on everything discussed here, it seems pretty clear that you'll need to file Form 1065 for your LLC. The consensus from multiple experienced folks is that the IRS will look through both disregarded entities (your revocable trust and the SMLLC) and see two ultimate beneficial owners in a non-community property state. I'd suggest getting this confirmed officially before filing, especially since you mentioned this is your first year with this structure. The penalty risks for filing incorrectly on partnership returns can be significant. Also, for next year's planning, you might want to evaluate whether this structure is still serving your needs. From what you've described about wanting probate avoidance and business continuity, there might be simpler ways to achieve those goals without the Form 1065 complexity. An estate planning attorney who works with business owners could probably show you some alternatives that accomplish the same objectives with cleaner tax reporting. Good luck with your filing - and congratulations on the successful Amazon FBA business!

Has anyone used the IRS's Volunteer Income Tax Assistance (VITA) program for partnership returns? Their website says they help with "basic" tax returns, but I'm not sure if that includes small business partnerships.

As someone who's been through this exact situation, I can confirm you absolutely do NOT need to spend $159 on TurboTax Business! I was in a similar spot last year with my partner's LLC involvement. Here's what I learned: Yes, you can download the fillable Form 1065 and Schedule K-1 PDFs directly from IRS.gov and mail them in. The key things to watch for are making sure all the required sections are completed (even if they're zero amounts) and that your wife's K-1 properly reflects her 15% share of income, deductions, and credits. Since you mentioned the business is straightforward with profit distribution based on ownership percentages, you should be fine doing it manually. Just take your time with the balance sheet sections and make sure the numbers tie out. The IRS instructions for Form 1065 are actually pretty detailed if you need guidance on specific lines. One tip: Make copies of everything before mailing, and consider sending it certified mail for your records. Save yourself the $159 and put that money toward something more useful!

Based on what everyone has shared here, it sounds like your ProSystems FX is handling this correctly. Since you properly reported the Section 751 gain as ordinary income in Box 1 of the K-1s with code AB in Box 20, that income should flow to Schedule E on the partners' individual returns - not Form 4797. The confusion often comes from thinking that Section 751 gains always need Form 4797 treatment, but that's not the case when the partnership has already done the characterization work at the entity level. Your attachment of the Section 751 statement to the 1065 satisfies the documentation requirement. One thing to double-check though - make sure there aren't any special rate gains hiding in the PTP transaction (like the collectibles or unrecaptured Section 1250 gains that Ian mentioned). These would show up with different codes and need separate treatment on the individual returns. But for straight Section 751 ordinary income, Schedule E is correct.

Just wanted to add my experience as someone who's dealt with several PTP Section 751 situations - the reporting can get tricky when you have multiple PTPs with different types of gains. One thing I've learned is to always request the detailed Section 751 calculation from the partnership if it's not clearly attached to the return. Sometimes partnerships will just put the final number in Box 1 without showing the breakdown of which assets triggered the ordinary income treatment. This becomes important if you're preparing returns for partners who have other capital losses they're trying to offset - they need to understand that the Section 751 portion can't be used to offset those losses since it's characterized as ordinary income. Also, for future reference, if you ever encounter a situation where the partnership didn't properly identify Section 751 property, the individual partners would need to make the adjustment themselves using Form 4797. But from your description, it sounds like your partnership did everything correctly. ProSystems FX can be frustrating with the lack of clear tagging, but as long as the income flows to Schedule E and you've verified the partnership's Section 751 calculation, you should be in good shape.

I've been dealing with ITIN employees for about two years now in my construction business, and I wanted to share a few practical tips that might help other employers: First, always keep detailed records of the work authorization documents you verify during the I-9 process. This is separate from the tax ID issue but equally important. Some of my ITIN employees had employment authorization documents that were temporary, so I had to track renewal dates. Second, double-check that your business insurance and workers' compensation policies don't have any special requirements for employees with ITINs. Most don't, but it's worth confirming with your insurance agent. Finally, if you use a payroll service, make sure they're experienced with ITINs before you hire the employee. I had one service that kept "correcting" the ITIN back to look like an SSN, which created problems with our filings. Now I always test the system with a sample ITIN before processing actual payroll. The good news is that once you get the systems set up properly, it's really no different from processing any other employee's taxes. The IRS treats the income reporting exactly the same way.

Great question about tracking renewal dates! I use a simple spreadsheet with columns for employee name, document type, issue date, and expiration date. I set up calendar reminders 90 days and 30 days before each expiration so I can give the employee plenty of notice to renew their authorization. Some document types like EADs (Employment Authorization Documents) are only valid for specific periods, so staying on top of this is crucial. For direct deposit with ITINs, I haven't had any major issues, but some banks do ask additional questions for compliance reasons. Make sure you have a copy of the employee's ITIN authorization letter from the IRS (CP 565) if they have one - this can help verify the legitimacy of the number. Most banks will process direct deposits normally once they understand you're following proper employment verification procedures. One tip: if your bank seems unfamiliar with ITINs, you might want to speak with a business banker rather than a regular teller. Business bankers typically have more experience with these situations and can set up the direct deposit without unnecessary delays.