The reporting thresholds for Form 1099-K are The amount is: $20,000? $600? $5,000? This is What You Must Be aware of -
1099-K Reporting
The form 1099-K can be used by third-party platforms and settlement organizations (including the most popular payment applications and online marketplaces) for reporting payments to companies whose total annual turnover exceeds $20,000 in gross payments and has at least 200 transactions per calendar year. The forms are usually issued in the year following by the 31st of March.
Reducing and delaying
With the American Rescue Plan Act of 2021, the threshold dropped to $600 in total gross payment, with the test for transaction count being eliminated entirely. But the implementation of this lower threshold was repeatedly delayed, first in 2022, and again in 2023. The question is, what's in store for 2024?
The Scoop in 2024
In the last quarter of 2013, the IRS all just scrapped the $600 threshold and settled on an undetermined threshold of $5,000, with no test for the number of transactions. They are saying it's a gradual approach of the $600 threshold and we're not putting our breath for it. All we know is that the threshold to report for 2024 will be $5,000- period.
This is an important change from the prior $2000 and 200 transactions requirement which covered a greater number of retailers than prior to.
What Does This Mean for Sellers
The year 2023 was the last time sellers were subject to 1099-K reporting when they had more than $20,000 in gross payments or 200 transactions. With the threshold being reduced to $5,000 in 2024, we anticipate a significant increase in the number of sellers who will be receiving this form. In fact, more than 50 percent likely to be receiving the form for the very first time.
At , we stay up with changes to tax rules and regulations so that you don't have to keep up, and you can be focused on growing as we take care of the intricacies of global tax.
To find out more read an IRS official statement below..
