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Author Topic: Taxes on notes?

G
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Taxes on notes?
OP: November 21, 2012, 12:00:00 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.
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Taxes on notes?
#1: December 31, 1969, 07:00:00 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/
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g
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Taxes on notes?
#2: December 31, 1969, 07:00:00 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
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T
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Taxes on notes?
#3: December 31, 1969, 07:00:00 PM
Thanks for the info!
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m
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Taxes on notes?
#4: December 31, 1969, 07:00:00 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
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T
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Taxes on notes?
#5: December 31, 1969, 07:00:00 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/
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A
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Taxes on notes?
#6: December 31, 1969, 07:00:00 PM
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.
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