Did you receive a Form 1099-K for Tax Year 2023?

If you received payments for sold goods or services in 2023 through certain payment apps, such as Venmo, Paypal, CashApp, or other online marketplaces or if you accepted payment cards, you may have received a third party reporting document Form 1099-K, Payment Card and Third Party Network Transactions.

On November 30, 2023, the Internal Revenue Service (IRS) announced a delay in requiring the new federal law $600 reporting threshold for tax year 2023 on Form 1099-K. The previous reporting thresholds remain in place for 2023, which are more than $20,000 in payments and over 200 transactions. Taxpayers could have still received forms below the threshold this year. It is important to know that taxpayers must report income that includes payments they receive in cash, property, goods, digital assets or foreign sources or assets, whether a 1099-K form is received or not.

“We spent many months gathering feedback from third party groups and others, and it became increasingly clear we need additional time to effectively implement the new reporting requirements,” said IRS Commissioner Danny Werfel. “Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion as we continue to look at changes to the Form 1040. It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area.”

“The IRS will use this additional time to continue carefully crafting a way forward to minimize burden,” Werfel said. “We want to make this as easy as possible for taxpayers. We will work to make the new reporting requirements easier for them, and we’ll work closely with third party groups, tax professionals and others to find the smoothest path to ensure compliance with the law. This is consistent with our Strategic Operating Plan. The IRS is focused on meeting taxpayers where they are and helping them get it right the first time.”

It is important to note, just because a payment is reported on a Form 1099-K does not mean that it is taxable. Personal payments like birthday or holiday gifts, ride sharing, household bills, or payments to family members will not be tracked. As an example, Venmo has a system in place for users to choose whether to tag a payment as being for “goods and services.” Payments tagged as “goods and services,” along with all payments made to business profiles, will be reportable on Form 1099-K if the reporting threshold is met.  1099-K recipients  will need to review the form to confirm that the amount is correct, and to determine any deductible expenses associated with the payment you may be able to claim when taxes are filed. 

If you sold items at a loss, meaning that you paid more for the items than for what you sold them for, there is not a tax liability. You will be able to zero out the payment on your tax return by reporting both the payment and an offsetting adjustment on a Form 1040, Schedule 1. This will ensure if forms were received, you don’t have to pay taxes you don’t owe. If you sold items at a gain, which means you paid less than for what you sold it, you are required to report that gain as taxable income.

More Information can be found here:

See What to do with Form 1099-K for more information on how to report an incorrect Form 1099-K.

See Understanding Your Form 1099-K and Form 1099-K FAQs for more information.

SPS/GZ will report unfolding tax form filing requirements as they become available. We are a full-service tax reporting and stock plan administration firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to business clients of all sizes. We create and e-file, various 1099s, including 1099-NEC, Forms 1042-S, 1098-T, Affordable Care Act tax forms, and Forms 3921 and 3922. Our complete and affordable solution allows administrators to simply upload their tax form data file to our secure portal in a few simple steps and we handle everything else to keep your organization compliant. Contact us today at sales@greenzapato.com or call at (888)375-3049. 

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