OT: Question for you CPA's and Accountants.
- Thread starter GloryDawg
- Start date
IRS announces delay in Form 1099-K reporting threshold for third party platform payments in 2023; plans for a threshold of $5,000 for 2024 to phase in implementation | Internal Revenue Service
IR-2023-221, Nov. 21, 2023 — Following feedback from taxpayers, tax professionals and payment processors and to reduce taxpayer confusion, the Internal Revenue Service today released Notice 2023-74 announcing a delay of the new $600 Form 1099-K reporting threshold for third party settlement...
Thanks, Goat. I didn't know. I'm fine with requiring Venmo, etc. to report payments to the IRS, but the $600 threshold has been around since 1954. They really need to update the threshold to something more reasonable, like $20,000 or so.IRS announces delay in Form 1099-K reporting threshold for third party platform payments in 2023; plans for a threshold of $5,000 for 2024 to phase in implementation | Internal Revenue Service
IR-2023-221, Nov. 21, 2023 — Following feedback from taxpayers, tax professionals and payment processors and to reduce taxpayer confusion, the Internal Revenue Service today released Notice 2023-74 announcing a delay of the new $600 Form 1099-K reporting threshold for third party settlement...www.irs.gov
I didn't either, just searched it. I'm pretty familiar with it because I had some hands-on experience with starting a non-profit over the past few years, due to revenue going over thresholds and such. Plus, I sold some things on PayPal this year under goods and services, and I had to input my info since I went over $600. I was prepared to pay some taxes, so this is good news, although it really wasn't that much.
The $600 threshold is so that business owners can't pay people for contract labor and put it on their books without issuing a 1099. The reason being, if a business is deducting over $600 as an expense, somebody else should be counting that as income received. So, the $600 threshold on Venmo, Paypal, CashApp, etc. is meant to help the IRS maintain that safeguard.
Exactly. I've got no problem with enforcing income tax laws. But the threshold is FAR too low.
Yes, $600 1099-K got postponed another year, so nothing to worry about in TY23, and if I'm not mistaken there should be a $5,000 threshold to slowly implement the threshold for TY24 and beyond, just did a tax seminar on this very thing. I think the majority of our calls have been about this, ERC, or conservation easement more than anything. I usually tell our clients that I personally use Venmo, and if you're just using it for reimbursement purposes, then there's nothing to worry about anyway. For example, I send my fiancé around $50 a month to reimburse her for buying a 50lb bag of dog food, and I try to label it as "reimbursement for dog food" and not just "dog food" so it doesn't look like she's selling me dog food. If she were to receive a 1099-K, I would let her know to contact Venmo ASAP about it and let them know that it was sent in error.
https://www.irs.gov/newsroom/action...ceived-in-error-or-with-incorrect-information
(This needs to be updated, still says the $600 threshold for 23 is in effect, when it was indeed postponed. See the post by @OG Goat Holder where he posted the link to the IRS news release.)
https://www.irs.gov/pub/taxpros/fs-2022-41.pdf
These links should detail everything you need to know about the 1099-K from the eyes of the IRS.
Just to pull a quote directly from the 2nd form:
"Q8. My friend and I went to a concert, and my friend reimbursed money to me for her concert ticket through an online application. If I get a Form 1099-K for the reimbursement, do I need to pay taxes on it? (added December 28, 2022)
A8. Because the money is not payment for the sale of goods or the provision of services, generally the reimbursement would not be taxable to you.
If you believe the information on Form 1099-K, is incorrect, the form has been issued in error, or you have a question relating to the form, contact the filer, whose name and contact information appears in the upper left corner on the front of the form. You may also contact the payment settlement entity whose name and phone number are shown in the lower left side of the form.
If you cannot get the form corrected, the error should be reported on Form 1040, Schedule 1, Part I, Additional Income, Line 8z, Other Income, with an offsetting entry in Part II, Adjustments to Income, Line 24z, Other Adjustments.
For example, if you received $800 from a friend reimbursing you for a concert ticket and you received a Form 1099-K reporting this as gross proceeds, your Schedule 1 should reflect the following:
Form 1040, Schedule 1
Part I – Line 8z, Other Income. List type and amount: "Form 1099-K Received in Error…. $800" to show the proceeds reported on the Form 1099-K.
Part II – Line 24z, Other Adjustments. List type and amount: "Form 1099-K Received in Error…. $800" to offset the proceeds reported to you in error. Not reporting this adjustment could result in you improperly reporting gain on the reimbursement."
What about the vast majority of Ebay (or FB marketplace) users who are just selling old junk, and will exceed the $600 in 2025, or $5K in 2024. Thats not a reimbursement. Do they now have to file the business form, and somehow dig up the original cost of all the old junk to show zero profit? Seems like a giant pain now.
Last year for Seatgeek income I got the tax form for the first time and had to go through and show there was zero profit or it would have been taxed.
Last year for Seatgeek income I got the tax form for the first time and had to go through and show there was zero profit or it would have been taxed.
I did not mean to quote you. I hit the wrong button somehow.
I think Ebay now has a garage sell listing. I have not been able to find it but I heard there was a way to list your item as a garage sell avoiding the 1099.
Not saying I agree with the very low threshold, just providing information on why it exists lol
The IRS keeps saying it's because of confusion with the public and the apps. It's been two years since they changed the rule. The public sector would figure it out in two years. I think it is really the IRS not ready for it. I read that there would have been 44 million additional 1099's this tax season. I don't think the IRS could handle it. That's also a lot of voters getting a 1099 in an election year.
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