In Form 1099-K, the threshold for reporting is $120,000? $600? $5,000? Do You Want to Find out about $5,000? This is what you need to Know

Sep 19, 2024

1099-K Reporting

Form 1099-K is used by third-party settlement providers or businesses (including popular payment applications and online marketplaces) for the purpose of recording payments made to businesses that have a revenue of more than the amount of $20,000 for gross payments, and more than 200 transactions within one calendar year. Form 1099-K is usually issued the following year, on the 31st day of March.

     Delaying and reducing    

The main reason was that as part of the American Rescue Plan Act of 2021 the threshold was reduced to $600 for any gross payment and the requirement to test the amount of transactions was completely removed. The introduction for the new threshold has been frequently delayed. It was first implemented in 2022 before being reinstated in 2023. What's next in 2024?

     the Scoop in 2024    

In the last quarter of 2013 the IRS all did was to remove the threshold of $600, before settling on an undetermined amount of $5,000. with no examination to establish the amount of the transactions. The IRS has declared it will be a gradual progression towards the $600 threshold however it isn't a guarantee in the near future. What we do know is the threshold for reporting in 2024 is $5,000, for a specified time.

This is an important change from the previous 200 and $20,000 transactions which were applicable to a wider range of businesses that.

What Does This Mean for Sellers?

2023 was the last time that sellers were liable to 1099-K reporting if they surpassed the limit of $20,000 in total payments or had more than 200 transactions. Since the threshold is set to decrease to $5,000 by 2024, we expect that we will see an increase in the amount of sellers receiving this report as well as over 50% of them likely to be getting this form for the very first time.

At , we stay up with the constant evolution of tax laws and regulations to ensure that you don't have to, allowing you to focus on your business growth while we manage the complex tax issue worldwide.

To find out more, refer to the IRS Notice below..

JT Grewal

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