I retired from my own business in Nov. 2015. My sales were reported on Schedule C of my 2015 tax return. In my business, I made sales on an installment/payment plan. Therefore I continued to collect money off of 2015 sales into 2016. Some of those payments were made on credit cards, so I received a 1099-K. Did I pay tax on the sales in 2015 or do I pay tax on the money received for those sales in 2016?
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You need to really take a look at the 2015 as to how you did this.
For example, if I bought something from you for $1,000, and paid you $200 in 2015, what did you report on the 2015 return? $1,000 or $200 on my sale.
If you reported $200 in 2015, then when I pay you $400 in 2016, that is taxable income in 2016.
If you reported $1,000 in 2015, then only interest is taxable on the money I paid in 2016 (if interest is charged).
You need to really take a look at the 2015 as to how you did this.
For example, if I bought something from you for $1,000, and paid you $200 in 2015, what did you report on the 2015 return? $1,000 or $200 on my sale.
If you reported $200 in 2015, then when I pay you $400 in 2016, that is taxable income in 2016.
If you reported $1,000 in 2015, then only interest is taxable on the money I paid in 2016 (if interest is charged).
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