Update to Form 1099-K Reporting Threshold

In late December 2022, the Internal Revenue Service announced a delay in reporting thresholds for third-party settlement organizations (TPSOs). As a result of the delay, the existing 1099-K reporting threshold of $20,000 in payments from over 200 transactions remains in effect for 2022.

As part of this decision, the IRS outlined that calendar year 2022 will be a transition period for implementation of the lowered threshold reporting for TPSOs including Venmo, PayPal and CashApp. The transition period delays the reporting of transactions in excess of $600 to those that occur after calendar year 2022. The transition period is intended to facilitate an orderly transition for TPSO tax compliance, as well as individual payee compliance with income tax reporting.

The law is not intended to track personal transactions such as sharing the cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another for a household bill. Nonetheless, there is still a great deal of confusion around Form 1099-K so the IRS published Frequently asked questions about Form 1099-K (irs.gov)

Questions? Reach out to your accounting professional.

Source: www.irs.gov