2023 Tax Prep Notes: You May Get a 1099-K This YearShare this post
Surprise! You May Be the Recipient of a 1099-K Tax Form This Year
The IRS and your tax preparers are urging taxpayers to be aware that they may receive a 1099-K tax form this year. Due to a newly lowered threshold, anyone who received payments amounting to $600 and up will receive a 1099-K form for third-party payment network transactions.
This year Congress lowered the threshold for businesses to send the 1099-K form from $20,000 to $600. This means taxpayers who received $600 or more in payments from payment services Venmo, PayPal and Apple Cash as well as online merchants like eBay, Etsy or Facebook Marketplace and Amazon Marketplace, will get now receive the 1099-K form.
What is Form 1099-K
Taxpayers should report the income they earned, including from part-time work, side jobs or the sale of goods. Due to American Rescue Plan Act of 2021, the reporting threshold was lowered for third-party networks that process payments for those doing business. Prior to 2022, this form was issued when the total number of transactions exceeded 200 for the year and the aggregate amount of the transactions exceeded $20,000. Now a single transaction exceeding $600 can trigger a 1099-K. The lower information reporting threshold and the summary of income on Form 1099-K enables taxpayers to more easily track the amounts received. Remember, money received through third-party payment applications from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable. Those who receive a 1099-K reflecting income they didn’t earn should call the issuer. The IRS cannot correct it.
The process is underway so just be forewarned. In 2022, you may receive a new tax form to include in your 2022 tax returns. Anthony J. Madonia & Associates is dedicated to all aspects of taxation and tax preparation. Contact us if you need tax preparation assistance this year.