For Form 1099-K, reporting thresholds: $20,000? $600? $5,000? Here's What You Need to Be aware of How much is $5,000?
1099-K Reporting
Form 1099-K is utilized by third-party platforms or settlement companies (including the most popular payment applications and online marketplaces) for reporting payments to businesses whose annual revenue is greater than $20,000 in total payments and at least 200 transactions per calendar year. The forms usually are issued in the year following on March 31.
Reduce and Delay
With the American Rescue Plan Act of 2021, the threshold was decreased to $600 total gross payment, with the test of transaction count eliminated completely. But the implementation of this reduced threshold has been repeatedly delayed, starting in 2022, and again in 2023. What's next for 2024?
The Scoop on 2024
Late last year, the IRS all just scrapped the $600 threshold but instead settled for an arbitrary $5,000 threshold without a test for total transaction count. They are declaring it to be a phased approach of the $600 threshold, but we aren't holding the breath of hope. All we know is that the threshold to report for 2024 will be $5,000 -- - for the duration.
This is an important change from the earlier $20,000 and 200 transaction requirement, encompassing a much larger range of businesses than prior to.
How Does It Impact Sellers
For 2023 sellers were only subject to 1099-K reporting if they surpassed $20k in gross transactions and 200 transactions. With the threshold being reduced to $5,000 in 2024, we expect an increase in the amount of sellers who will be receiving the form. More than 50% likely to receive this report for the first time.
We keep pace with the constant shifts in tax rules and regulations so that you don't need to worry about it, which lets you be focused on growing while we manage the complexities of international tax.
For further information read this IRS announcement below..
