Form 1099-K Reporting Thresholds $120,000? $600? $5,000? This is What You Must Know -
1099-K Reporting
Form 1099-K is utilized by third-party settlement platforms or organisations (including well-known payment apps as well as online marketplaces) in order to record payments made to merchants whose annual activity exceeds $20,000 in gross payments and has at least 200 transactions during a calendar year. The forms usually are issued the following year by March 31.
Redue and Delay
With the American Rescue Plan Act of 2021, the threshold was reduced to $600 for all net payments, and the test of transaction count eliminated entirely. The implementation of the lower threshold has been delayed several times, initially 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 undetermined threshold of $5,000 that has no criteria for total transaction count. They are calling it a phased method of implementing the $600 threshold however we're not holding the breath of hope. What we do know is the reporting threshold for 2024 is $5,000- period.
This is an important change from the prior $200 and $20,000 transaction requirements that covered a larger number of retailers than before.
How Does It Impact Sellers
The year 2023 was the last time sellers were only required to file 1099-K reports when they reached $20k in gross transactions and 200 transactions. However, with the threshold dropping to $5,000 for 2024, we anticipate a significant increase in the amount of sellers receiving the form. More than 50% likely to receive this form for the first time.
We keep pace with the constant shifts in taxes and tax regulations, so that you don't have to worry about it, which lets you be focused on growing while we manage the complexities of taxation worldwide.
For further information, you can view an IRS official statement below..
