![](\"https:\/\/s3.amazonaws.com\/snd-store\/a\/93109571\/11_29_23_2200665399_etra17_560x292.jpg\")
<\/p>\n<\/p>\n
For the second consecutive year, the IRS has postponed implementation of a new rule that\u00a0would have led to an estimated 44\u00a0million taxpayers receiving tax forms from payment apps and online marketplaces such as Venmo and eBay. While the delay should spare such\u00a0taxpayers some confusion, it won\u2019t affect their tax liability or income reporting responsibilities. And the IRS indicated that it intends to begin phasing in the rule in\u00a02024.<\/p>\n
The new reporting rule<\/strong><\/p>\n The rule concerns IRS Form\u00a01099-K, Payment Card and Third Party Network Transactions<\/em>, an information return first introduced in 2012. The form is issued to report payments\u00a0from:<\/p>\n If you receive direct payments via credit, debit or gift card, you should receive the form from your payment processors or payment settlement entity. But for years, payment apps and online marketplaces have been required to send Form\u00a01099-K only if the payments you receive for goods and services total more than $20,000 from more than 200 transactions (although they can choose to send you the form with lower\u00a0amounts).<\/p>\n The form reports the gross amount of all reportable transactions for the year and by the month. The IRS also receives a\u00a0copy.<\/p>\n The American Rescue Plan Act (ARPA), enacted in March\u00a02021, significantly expanded the reach of Form\u00a01099-K. The changes were designed to improve voluntary tax compliance for these types of payments. According to the IRS, tax compliance is higher when amounts are subject to information reporting.<\/p>\n Under ARPA, payment apps and online marketplaces must report payments of more than\u00a0$600 for the sale of goods and services; the number of transactions is irrelevant. As a\u00a0result, the form would be sent to many more taxpayers who use payment apps or online\u00a0marketplaces to accept payments. The rule change could ensnare not only small businesses and individuals with side hustles but also \u201ccasual sellers\u201d of used personal\u00a0items\u00a0like clothing, furniture and other household\u00a0items.<\/p>\n The change originally was scheduled to take effect for the 2022 tax year, with the forms going out in January\u00a02023. However, in December\u00a02022, the IRS announced its first implementation delay and released guidance stating that 2022 would be a transition period for the\u00a0change.<\/p>\n The agency also acknowledged that the change must be managed carefully to help ensure that 1)\u00a0the forms are issued only to taxpayers who should receive them, and 2)\u00a0taxpayers understand what to do as a result of this reporting.<\/p>\n The updated implementation plan<\/strong><\/p>\n In a November\u00a02023 report, the U.S. Government Accountability Office (GAO) stated that the IRS expects to receive about 44\u00a0million Form\u00a01099-Ks in 2024 \u2014 an increase of around 30\u00a0million. The GAO found, however, that the \u201cIRS does not have a plan to analyze these data to inform enforcement and outreach priorities.\u201d<\/p>\n Less than a week later, the IRS announced a second delay in the rule change, explaining that the previous thresholds ($20,000 \/ more than 200 transactions) remain in place for 2023. The agency cited feedback from taxpayers, tax professionals and payment processors, as well as the possibility of taxpayer confusion.<\/p>\n It seemed likely confusion would ensue when the forms started hitting mailboxes in January\u00a02024. For example, with forms sent by payment apps or online marketplaces, it\u2019s\u00a0not clear how taxpayers should transfer the reported amounts to their individual tax returns. The income shown on the form might be properly reported on the recipient\u2019s:<\/p>\n In addition, the gross amount of a reported payment doesn\u2019t include any adjustments for credits, cash equivalents, discounts, fees, refunds or other amounts \u2014 so the full amount reported might not be the taxable\u00a0amount.<\/p>\n Moreover, not every reportable transaction is taxable. If you sell a personal item on eBay at\u00a0a loss, for example, you aren\u2019t required to pay tax on the sale. If you met the $600 threshold, though, that sale would appear on your Form\u00a01099-K.<\/p>\n Be aware that the IRS isn\u2019t abandoning the lower threshold. In its latest announcement, the agency indicated that a transitional threshold of $5,000 will apply for tax year 2024. This phased-in approach, the IRS says, will allow it to review its operational processes to better address taxpayer and stakeholder concerns.<\/p>\n Advice for Form\u00a01099-K recipients<\/strong><\/p>\n If you receive a Form\u00a01099-K under the existing thresholds, the IRS advises you to review the form carefully to determine whether the amounts are correct. You also should identify any related deductible expenses you may be able to claim on your\u00a0return.<\/p>\n If the form includes personal items that you sold at a loss, the IRS says you should \u201czero out\u201d the payment on your return by reporting both the payment and an offsetting adjustment on Form\u00a01040, Schedule\u00a01. If you sold such items at a gain, you must report the gain as taxable\u00a0income.<\/p>\n Taxes remain the same<\/strong><\/p>\n It\u2019s worth repeating that the delay in the implementation of the new Form\u00a01099-K threshold doesn\u2019t affect taxpayers\u2019 obligations to report income on their tax returns. All income is taxable unless excluded by law, regardless of whether a taxpayer receives a Form\u00a01099-K. If you have questions regarding Form\u00a01099-K reporting, please contact\u00a0us.<\/p>\n \u00a9 2023<\/p>\n <\/body> For the second consecutive year, the IRS has postponed implementation of a new rule that\u00a0would have led to an estimated 44\u00a0million taxpayers receiving tax forms from payment apps and online marketplaces such as Venmo and eBay. While the delay should spare such\u00a0taxpayers some confusion, it won\u2019t affect their tax liability or income reporting responsibilities. And […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,59,10],"tags":[8,11,12],"class_list":["post-16925","post","type-post","status-publish","format-standard","hentry","category-articles","category-etra","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16925","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=16925"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16925\/revisions"}],"predecessor-version":[{"id":16926,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16925\/revisions\/16926"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=16925"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=16925"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=16925"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\n
\n<\/html><\/p>\n","protected":false},"excerpt":{"rendered":"