Changes to Form 1099-K Postponed

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IRS delays $600 Threshold for Form 1099-K

 

On December 23, 2022, the IRS announced it would delay the implementation of a $600 threshold for filing a Form 1099-K. The Form 1099-K reports transactions involving services such as eBay, PayPal, Venmo, Etsy and third-party settlement organizations (TPSOs). The $600 threshold was scheduled to take effect in 2023 and was predicted to generate millions of new forms going out to unsuspecting taxpayers and their accountants.

According to the IRS, third-party settlement organizations won’t be required to report tax year 2022 transactions for the lower threshold amount.  Form 1099-K is an informational tax document detailing the gross payments for goods and services for all your third-party payment platform transactions. Before this announcement, third-party payment platforms such as eBay, Etsy, PayPal, or Venmo were required to issue Form 1099-K to all users who had payments totaling $600 or more in a calendar year, with no transaction minimum.

The American Rescue Plan of 2021 changed the reporting threshold for TPSOs. The new threshold was set at $600 for business transactions in a year, much lower than the previous threshold of more than 200 transactions per year exceeding an amount of $20,000. The law is not intended to track personal transactions on TPSOs such as sharing hte cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another household bill.

For now, the 1099-K reporting threshold will remain at $20,000 in payments from over 200 transactions. The IRS released guidance outlining that calendar year 2022 will be a transition period for implementation of the lowered threshold reporting for third-party settlement organizations that would have generated Form 1099-Ks for taxpayers. Keep in mind, this delay only changes when companies are required to issue Form 1099-K. Even if you don’t receive a 1099-K for 2022, you still need to report any taxable income on your tax return.