Taxpayers who use online payment apps like Paypal or Venmo to do sales experienced a recent twist in understanding their reporting obligations, as the IRS made a last-minute adjustment to its Frequently Asked Questions (FAQs) to clarify this tax season’s requirements and beyond. In late 2023, the agency delayed the implementation of the new $600 Form 1099-K reporting threshold under the American Rescue Plan, treating 2023 as a transition year and maintaining the existing $20,000/200 transaction threshold. This adjustment is intended to alleviate confusion caused by the potential distribution of 44 million Forms 1099-K to individuals who may not anticipate them or have tax obligations. Despite being reported on Form 1099-K, not all payments are taxable, and taxable payments may not always be reported. The IRS advises taxpayers to review the policies of payment apps or online marketplaces they use and warns against misleading advice suggesting tax evasion tactics.
If you would like to read more, please visit: