Posted on 11/26/2022 2:32:48 PM PST by TigerClaws
The IRS on Tuesday shared tips for the upcoming tax season — including a reminder about the new $600 threshold for receiving Form 1099-K for third-party payments.
The change applies to payments from third-party networks, such as Venmo or PayPal, for transactions such as part-time work, side jobs or selling goods, according to the IRS.
Before 2022, the federal Form 1099-K reporting threshold was for taxpayers with more than 200 transactions worth an aggregate above $20,000. However, Congress slashed the limit as part of the American Rescue Plan Act of 2021, and a single transaction over $600 may now trigger the form.
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Aimed at closing the tax gap — a top priority of the Biden administration — the provision is estimated to bring in $8.4 billion from fiscal year 2021 to 2031, according to the Joint Committee on Taxation.
"It's going to be a new form for a lot of people," said Adam Markowitz, an enrolled agent and vice president at Howard L Markowitz PA, CPA in Windermere, Florida. "And the worst thing they can do is ignore it." Who may receive Form 1099-K for 2022
Companies file Form 1099-K, known as an "information return," annually to report credit card and third-party payments, with a copy going to taxpayers and the IRS.
Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, said the business income on your return must include what's reported on Form 1099-K. Otherwise, you may trigger an automatic IRS notice or even an audit, he said. The challenge with the new lower threshold amount of $600 for Form 1099-K is that personal payments and reimbursements could be incorrectly reported as taxable transactions. Justin Miller national director of wealth planning at Evercore Wealth Management
It's possible you'll receive Form 1099-K for transactions you don't expect, such as reselling Taylor Swift tickets at a profit, for example, warned Justin Miller, national director of wealth planning at Evercore Wealth Management in San Francisco.
But selling items at a loss, such as used furniture, may be less clear.
"Obviously, if you sell a $2,000 couch for $1,000, there's not taxable transaction there," Markowitz said. "You don't get a capital loss for it, and you don't have a gain." What happens if you get a 1099-K by mistake
Although the change aims to collect taxes on income, not personal transactions, experts say it's possible some filers may receive Form 1099-K by mistake.
"The challenge with the new lower threshold amount of $600 for Form 1099-K is that personal payments and reimbursements could be incorrectly reported as taxable transactions," Miller said.
A frequently asked questions page from the IRS says you shouldn't receive Form 1099-K for personal transfers, such as reimbursements for splitting meals, gifts or allowances.
However, if you receive the form for personal transactions, the agency says to contact the issuer for a correction. If the company doesn't fix the error, you can attach an explanation to your tax return while reporting your income correctly, the IRS says.
Odds of getting caught: 0.001% < / sar >
It behooves you to be long gone before that day. Start making plans.
The government wants its unfair share of the gig economy.
So- i get a 1099-K from stubhub for selling some of my Mets tickets. This means i can write off every and any tickets to Mets games i did not use.
If i get a 1099-K for $2000, i will deduct $2500 for the tickets.
I've done online surveys for many years using e-Rewards. You earn a certain amount if you complete a survey, and a partial payment if your responses don't qualify you to complete the whole survey. You can use the reward money to purchase gift cards, or add points to your airline miles, or hotel rewards, magazine subscriptions. I have never received a 1099 form for any rewards I've earned, or used during all those years. Now all of a sudden, Dynata, LLC who runs e-Rewards has told me I have to file a W-9 form (tax identification number) with them so they can send me a 1099 form if I've gone over the $600 amount in 2022.
I’ll bet The Biden Crime Family hides millions from taxation.
The diff is, I think, that now Paypal has to send you a 1099.
So if your side thing is selling stuff from estate sales or storage lockers on ebay then you may have a problem.
That’s funky. Those are usually considered discounts.
Why can’t the newly aligned House just not fund these new IRS agents?
87,000 new IRS agents.
Who did you think they’d target?
There’s also a new law a company (family business, small business, any business - except those excepted) will have to file to disclose ALL owners and the percentage they own.
More paperwork. More excuses to audit.
You call that a rescue plan?
Find a way to store value that can’t be electronically seized.
How much is the tax if you send a PayPal with $600 in it?
This is designed so they have an excuse to target ANY citizen, which will only apply to the Dems political opponents of course.
FUIRS
Buy a Skunk Farm, or maybe an Alligator Farm.
I’ve brought this up to people in the financial world who had no idea.
In my case, I sold a couple of items on eBay this year, totalling over $600, and then this summer sold a small camper through Facebook, a total of about $4500, and I sold each item for less than I paid for it.
Both will be sending me a 1099-K. When I brought this up to one financial advisor, he said, ‘just file it as a capital loss’.
Well, that’s fine if you’re filling 1040 long form and can find enough deductions to claim it. But if you’re doing short form, that’s just income. And you will pay taxes on it... again.
Fuel depot.
have em send it via western union or moneygram for cash pickup
Before 2022, businesses would generally receive a 1099-K tax form only when gross payments exceeded $20,000 for the year and the business conducted at least 200 transactions. As of the 2022 change in rules for the 1099-K, the gross payments threshold has been lowered to just over $600 for the year, and the transactions threshold no longer applies.
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