Author Topic: Taxes on notes?  (Read 3042 times)

Glaucus

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Taxes on notes?
« on: November 21, 2012, 10:47:58 AM »
I'm a small peanuts investor on Prosper. What can I expect from Prosper regarding taxes - do they send a 1099 for each note, or for my total portfolio? I use Turbotax and want to be prepared to record all the information properly.

I read somewhere (but can't find it now) that you need not worry about taxes on notes that pay less than $10 in interest per year. Is this true?

Any advice/suggestion or link would be much appreciated.

Peter

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Re: Taxes on notes?
« Reply #1 on: November 21, 2012, 12:38:45 PM »
You should read this post on my blog last year. Prosper will send you a 1099 that shows the total interest earned on all notes. It is Lending Club that only shows you the interest earned that is greater than $10 per note.
http://www.lendacademy.com/a-guide-to-filing-your-lending-club-and-prosper-taxes/
Publisher of the Lend Academy blog

See my returns here: http://www.lendacademy.com/returns

graceful

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Re: Taxes on notes?
« Reply #2 on: November 23, 2012, 02:13:11 PM »
I used TurboTax and had my first Prosper reports last year. The software stepped me through the steps and they jived with the instructions I got from the Lendstats forum(no longer available). It was easier than I expected.

Graceful

Glaucus

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Re: Taxes on notes?
« Reply #3 on: November 27, 2012, 02:25:27 PM »
Thanks for the info!

manshms

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Re: Taxes on notes?
« Reply #4 on: March 10, 2013, 06:08:22 PM »
It seems this year Lending Club is reporting the cumulative income for all notes regardless that income from individual notes may be less then $10.  Is that the proper way to report income to the IRS? 

The vast majority of my notes generate less then $10 of interest income and would seem to be non-reportable.

Thanks,

Scott

 :o

Peter

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Re: Taxes on notes?
« Reply #5 on: March 10, 2013, 11:03:16 PM »
Yes, all interest income needs to be reported to the IRS regardless of how large the notes. I write a tax update last week that has more info:
http://www.lendacademy.com/the-2013-lending-club-and-prosper-tax-guide/
Publisher of the Lend Academy blog

See my returns here: http://www.lendacademy.com/returns

AmCap

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Re: Taxes on notes?
« Reply #6 on: March 11, 2013, 08:00:20 AM »
There is no such thing as "non-reportable" income. All income is subject to tax unless explicitly excluded by Congress. Even if a payor like LC doesn't report, you still have a duty to include every penny in gross income.  Legally, even the crack dealer on the street corner must report income.