IRS Delays $600 Form 1099-K Requirement
Last month I wrote about a few year-end scams and IRS alerts to keep taxpayers abreast of important information. One of those alerts was about the IRS requirement for third-party payment platforms to send 1099-K forms to anyone who received more than $600 through the likes of Venmo or PayPal. This was supposed to be in effect for the 2022 tax season. However, there was apparently a huge outcry because the IRS has delayed implementing this requirement for the upcoming tax season. Do I hear a big sigh of relief ?
The reason for this delay, according to the IRS, is that the public expressed serious concerns “regarding the ability to comply and taxpayer confusion on how to report Form 1099-K on income tax returns. With little guidance available to the public and a significant increase in the burden on the electronic payment networks, the IRS decided a transition period was necessary.” https://www.taxpayeradvocate.irs.gov/news/nta-blog-heard-loud-and-clear-irs-postpones-implementation-of-600-form-1099-k-reporting-by-a-year/
However, what remains in place through December 31, 2023, are the previously established $20,000 and 200 transactions thresholds. And, of course, the IRS always reminds taxpayers that,
“The rules for reporting income are not changing. Anybody receiving taxable income paid through third-party networks must still track and report their taxable income.”
For those of you using electronic payment systems, such as PayPal, Venmo, and Cash App, it’s important to make sure personal payments like gifts or reimbursements to friends are properly classified as an amount paid for something other than goods or services. And there must be millions of you who do use these platforms for the IRS to take note, listen, and act so decisively and quickly.
So, Happy New Year to all of you who will benefit this year from this delay. But do start keeping track because the IRS will be ready to implement this requirement for the 2023 tax season.