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While not a new form, the IRS is reminding taxpayers and business owners that the rules for Form 1099-K include more payments on more transactions now.
UPDATE AS OF 12/27/2022:
IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K --> READ MORE
ORIGINAL POST FROM 11/30/2022:
The IRS reminds taxpayers earning income from selling goods and/or providing services that they may receive Form 1099-K, Payment Card and Third-Party Network Transactions, for payment card transactions and third-party payment network transactions of more than $600 for the year.
There is no change to the taxability of income – the only change is to the reporting rules for Form 1099-K. As before, income, including from part-time work, side jobs or the sale of goods, is still taxable. Taxpayers must report all income on their tax return unless it is excluded by law, whether they receive a Form 1099-NEC, Nonemployee Compensation, Form 1099-K or any other information return.
The IRS also emphasizes that money received through third-party payment applications from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable. If a Form 1099-K is incorrect and reflects income they didn’t earn, they should call the issuer. The IRS cannot correct it.
Additional income from Forms 1099-K may require taxpayers to begin making estimated tax payments. By law, taxpayers must pay tax on income as they earn it throughout the year. It is important for taxpayers to know they should pay at least 90% of their taxes during the year. Taxpayers should monitor their income throughout the year. For small business owners and self-employed people who don’t have withholding to adjust, this usually means making quarterly estimated tax payments.
Find more information on the Understanding your Form 1099-K and the new 1099-K Frequently Asked Questions IRS.gov webpages. You can also give us a call!
GENERAL REMINDER: Form 1099-K must be provided to you, the taxpayer, by January 31st of each year. This form is produced and provided by your payment card transaction processor or third-party payment network provider.
Legal Disclaimer: This post contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information. This information was current at time of posting; we are not responsible for updating this or any blog post/article for subsequent changes in the law or its interpretation.
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