The IRS has deferred payment services for one year, including: PayPal and Venmo and e-commerce companies, etc. Ebay, Etsy When Poshmark Tax returns must be issued to individuals conducting business Transactions through these platforms have exceeded $600.
The agency said on Friday that such third-party platforms won’t have to use that threshold when reporting transactions for tax year 2022 on Form 1099-K sent to both the IRS and taxpayers. I said no. Instead, he can rely on the pre-2022 threshold of 200 or more transactions totaling over $20,000.
America’s Rescue Plans Act of 2021 lowered the threshold to just $600. Forms can also be triggered in a single transaction.
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“To facilitate a smooth transition and ensure clarity for taxpayers, tax professionals and the industry, the IRS is delaying implementation of the 1099-K changes,” IRS Acting Commissioner Doug O’Donnell said in a statement. .
“The additional time will help reduce confusion during the upcoming 2023 tax return season and provide taxpayers more time to prepare and understand the new reporting requirements.”
The agency said it will issue additional details about the delay and guidance for taxpayers who may have already received a 1099-K as a result of changes to the American Rescue Plan.
Even without the new reporting requirements, income from commerce through such platforms will still be taxable and sellers will have to report it. It just means that you don’t generate tax returns for the year.
Tax experts had ‘deep concerns’ about the $600 threshold
Tax professionals and consumers are likely to welcome the delay.
Tax professionals avoid low tax reporting which can be problematic for filers as they risk receiving 1099-Ks for personal transfers on platforms such as Venmo and PayPal, including gifts and refunds. threshold was flagged.
Albert Campo, a CPA in Manalapan, New Jersey and president of AJC Accounting Services, told CNBC earlier this month:
“We expect most of our clients to get these things,” he said.
Last week, the American Institute of Certified Public Accountants expressed “deep concern” about the $600 tax reporting threshold in letters to the Senate Finance Committee and the House Ways and Means Committee.
A group of experts endorsed the National Taxpayers Union Foundation’s recommendation, saying it would raise the threshold to “a level sufficient to exempt casual or low-level online activity.”
The AICPA says even the $5,000 threshold would be “major progress.”
— CNBC’s Kate Dore and Kelli Grant contributed to the report.