The 1099-K form reports payments and transactions from online platforms, apps or payment card processors. Officially, this document is called “Form 1099-K: Payment Card and Third-Party Network Transactions”.
The IRS reduced the amount received for transactions received online from $20,000.00 (and 200 transactions) to $600.00 from any platform. This law is meant to apply to payments received for goods and services; however, it may be issued for personal payments and transfers.
The IRS will not issue a form 1099K to individuals with transactions totaling less than $20,000.00 for tax year 2022; However, at the end of 2023, the amount will be reduced to $600.00 (similar to the self-employment reporting threshold). We will have to wait until the IRS publishes the procedures to understand reporting requirements and what will constitute an online transaction.
Will you be required to pay taxes on the 1099K?
If the 1099-K is received for transactions received from sales of goods or services than reporting will be required on the return. Transferring money should not trigger issuance of this form but we believe that many clients may receive the 1099-K by mistake.
Please contact American International Tax Advisers for additional questions regarding Form 1099-K.
Thomas M. Carden E.A. JSM
