In response to feedback received from taxpayers, tax professionals, and payment processors, and to alleviate taxpayer confusion, the Internal Revenue Service (IRS) has delayed the implementation of the new $600 Form 1099-K reporting threshold requirement in 2023 for third-party payment organizations, such as Venmo, PayPal, Amazon, and Square. Instead, the IRS plans to introduce a phased approach by setting a threshold of $5,000 for 2024.
What is the Monetary Threshold for Form 1099-K?
For 2023, individuals using payment apps and online marketplaces will only receive the Form 1099-K if their earnings exceed $20,000 and involve more than 200 transactions. However, for the 2024 tax year, the IRS is implementing a lower threshold of $5,000 for reporting requirements.
You will want to confirm the form matches the information in your records. If there are discrepancies, contact the third-party payment network to issue a corrected form. And remember, the IRS requires taxpayers to report all taxable income on their tax return, whether a Form 1099-K was received or not.
Phased-In Approach
This phased-in approach will allow the agency to review its operational processes to better address concerns raised by taxpayers and stakeholders. Additionally, it will allow the IRS, taxpayers, and form filers the time to understand the complexities surrounding the new rule and adequately prepare for the reduced threshold.
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