IRS has delayed reporting threshold for Form 1099-K
The IRS has decided to delay the new $600 reporting threshold for Form 1099-K for the year 2023 to address concerns and reduce confusion among taxpayers. This means that individuals won't be required to report unless they receive over $20,000 and have more than 200 transactions in 2023.
For the year 2024, the IRS is planning a phased-in approach, with a reporting threshold of $5,000. The delay is aimed at providing more time for stakeholders to adapt to the changes and to gather feedback on the reporting process. The IRS is also considering updates to the Form 1040 for 2024 to simplify reporting for taxpayers.
The initial reporting requirement, enacted under the American Rescue Plan, mandated third party settlement organizations (TPSOs) to report payments over $600 starting in 2022. However, the IRS recognized the need for additional time to implement the new requirements effectively.
The reporting requirements do not apply to personal transactions like gifts or shared expenses. The delay allows for a careful consideration of the $5,000 threshold for 2024 and other aspects of the reporting requirement.
The IRS is also planning to make the tax forms easier for everyone in 2024, based on suggestions from the tax community. They want to simplify the main tax form, Form 1040, used by over 150 million people. Since these changes are a bit complicated, they're giving more time for feedback by delaying the updates until the 2024 tax year.
For more information, visit IRS.gov/1099k.