Nov 22, 2023

152 If you received business payments through apps like PayPal and Venmo in 2023, you will not be subject to a lower threshold for 1099-K tax reporting. For 2023, the old limit of more than 200 transactions with a total value greater than $20,000 will remain in effect. However, the IRS will impose a $5,000 limit for the 2024 tax year, applying to returns filed in 2025. Kevin Lamarque | Reuters If you received business payments through apps like PayPal or Venmo or e-commerce companies like eBay, Etsy, or Poshmark in 2023, your tax return might now be a little less complicated. Theirs announced Tuesday that 2023 would be a “transition year” for a new tax reporting requirement affecting these payments. Once in place, it will trigger Form 1099-K for just $600 in payments, even if that income comes from a single business transaction. For 2023, the old limit of more than 200 transactions with a total value greater than $20,000 will remain in effect. The agency will gradually lower the lower threshold by adding a $5,000 limit for 2024, but it did not specify a transaction limit. The $5,000 limit will apply to tax returns filed in 2025. Learn more about personal finance: Here’s how to avoid a costly divorce More part-time workers will benefit from retirement plans next year Black Friday deals aren’t as good as you think. Here’s how to get even lower prices The $600 threshold will take effect for tax year 2025, and taxpayers over the limit can expect to receive a 1099-K in early 2026. However, business payments have always been taxable and filers must still report their 2023 income even if they do not receive a Form 1099-K. “We spent many months gathering feedback from third-party groups and others, and it became increasingly clear that we needed more time to effectively implement the new reporting requirements,” IRS Commissioner Danny Werfel said in a statement. The agency said it also plans to update Form 1040, which is used by taxpayers to file their individual income tax returns, as well as associated schedules, to “make the reporting process easier.” “Taking this phased approach is the right thing to do for tax administration purposes, and it avoids unnecessary confusion as we continue to review changes to Form 1040,” Werfel said. “It is clear that an additional deferral for the 2023 tax year will avoid problems for taxpayers, tax professionals and others in this area.” The announcement comes amid bipartisan scrutiny of the reporting requirement, with lawmakers and industry professionals citing concerns about taxpayer confusion. Before this delay, the IRS was expecting approximately 44 million 1099-Ks for 2023. Gn bussni