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.
Well I can see a time coming people just have to do whatever they have to beat the IRS out of every penny or simply stop paying, these people are pure evil.
For eBay sellers, the threshold for a 1099K used to be more than 200 transactions AND more than $20K. It had to be both.
Now it’s $600 and at least one transaction.
Many so-called Republicans voted for this.
BOHICA.
If the babysitter and lawn boy make more than $600 they should file a tax return.
This is going to nail the ebay, Fakebook, venmo, and other small business or casual businesses.
Many of the transactions will be personal transactions selling used items no longer needed at a loss.
Where I see this becoming a nightmare is for people who have businesses and sell used personal items on the side.
The IRS is bombarding people with letters right now. I have two unrelated tax court cases to file this week because the IRS failed to process the correspondance and went right to a 90 day Notice of Determination.
It’s getting ridiculous.
Coming soon, social credit score and armed guards at every corner. One needs to remember the beginning of the “pandemic” when Johns Hopkins was signing up contact tracers and their questionnaire was full communist,”for the greater good,” and,” China is the model country because of their great ability to track every citizen.”
Oh, and the best,(paraphrased) the constitution is null and void as freedoms do not apply in an emergency of this magnitude.
The arming of the IRS to squeeze the already enslaved is just a step. Look for Musk brain chips, and another emergency soon? You will own nothing and be happy?
You betcha.
Past time to trade and barter outside electronics.
Hubs sold an old amp and with shipping got over $600
Was notified by eBay it would be reported.
That is not a profit but we will get a 1099k
It is so ridiculous.
I will forward to our tax pro with a note. Not sure what he will do with it.
But you shouldn’t have to hire tax pros in America. Not for basic households run by literate people.
We had a lot of small payments like musicians and we had to report over $600.
The authoritarians are salivating over our prospective non-compliance.
Why wouldn’t you file a long form?
I will file a 1099k every time I pay my real estate tax.
Many of the transactions will be personal transactions selling used items no longer needed at a loss.
= = =
Like a 2nd hand / consignment shop?
The law hasn’t changed, just an additional 80,000 armed federal agents to enforce it.
If you issue 1099s, please remind your independent contractors of this obligation to report that income, as the IRS has just announced that it is going to match every one of those 1099s to recipient personal filings.
It’s the law, but, does it really require excessive enforcement? Grant observed that the best way to get rid of a bad law is to enforce it. Meanwhile, people are going to suffer.
Yeh we’ll all be doing that. 😐
Obammy tried essentially the same thing but reversed it before it took effect. The decrepit old fool in the White House now is a Mean, vindictive sob who hates us.
This is so he can squeeze more money from the babysitter and the guy who chops wood and picks up a few extra bucks selling firewood.
Meanwhile he is going to squeeze our last cent with energy prices and inflation.
For a set of additional adjectives to apply to the decrepit old fool, send private message
Hmmm. I guess the gals who play the Poshmark game where they buy stuff at Goodwill for 5 bucks and then sell it on Poshmark for 50 bucks will get a 1099 surprise in the mail.
Crap like this makes me glad I’m retired.
The new “pay cash” law
Fluck them. We have 87,000 new armed IRS agents.
I mean to make damned sure none of them will show up at my place, or my neigbors place for that matter.
I intend to reveal every bit of income, and will make sure the commies now running the country have lots of money to follow their woke agenda.
Compliance is not the point.
These kinds of rules are meant to be used to terrorize ordinary people to keep them in line. They will be capriciously and arbitrarily enforced because accurate compliance is intended to be impossible.
The one consistent use of these rules is that there will be 100% enforcment against government opponents.
"Show me the man and I will show you the crime".
It is a bad law which should not even be on the books, let alone enforced. It will not be changed no matter how much damage enforcement of it causes.
It was passed by bad legislators who should never have been in office then and their successors who should not be in office now.
Changes to these kinds of laws will require the removal of our current lawmakers.
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