January 17, 2024 8:45 pm

Will I get a 1099-K for 2023?

On November 21, 2023, the IRS announced a delay in the 1099-K forms reporting threshold for third-party platform payments in 2023 in Notice 2023-74. The IRS has been following feedback from taxpayers, tax professionals, and payment processors in regard to the new threshold change of $600 for calendar year 2023.

The IRS has received much confusion from taxpayers, tax professionals, and payment processors in regard to this new law change. As a result of the confusion, the IRS has decided that reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023.

With that being said, the IRS is still planning for a threshold change to become effective for 2024. The new threshold is expected to be decreased to $5,000 for tax year 2024 as part of the phase-in to implementation of the $600 reporting threshold under the American Rescue Plan.

What transactions could result in a 1099-K being issued? Some examples include sales of goods and services, selling of personal items, furniture, and other household goods that income is collected through a payment processor/online platform. Some popular platforms include eBay, PayPal, and Venmo.

It is important to note that receiving a 1099-K doesn’t necessarily mean you owe taxes on the full amount issued on the Form 1099-K. Some transactions of the 1099-K may not be business related (for example, reimbursements from your roommate for groceries). Second, you may have deductions that could offset some of the income reported on the 1099-K. It is important to consult with a tax professional if the threshold change could affect you for 2024. If you are unsure, a tax professional can help consult you on reporting procedures, and from a tax standpoint, how much this could affect your tax return.

Source:

https://www.irs.gov/pub/irs-drop/n-23-74.pdf

https://www.irs.gov/newsroom/irs-announces-delay-in-form-1099-k-reporting-threshold-for-third-party-platform-payments-in-2023-plans-for-a-threshold-of-5000-for-2024-to-phase-in-implementation

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Tax Glossary

Capital loss carryover

A capital loss that is not deductible because it exceeds the annual $3,000 capital loss ceiling. A carryover loss may be deducted from capital gains of later years plus up to $3,000 of ordinary income.

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