Income Taxes
IRS Form 1099-K
IRS Form 1099-K
Internal Revenue Form 1099K is required to be used to report by third party processers amounts received and processed for others the credit card and other payments received by them for those who use their platform.
Taxpayers who receive Form 1099-K should use that information with their other tax records to determine the correct reporting of their income.
Taxpayers are required to report all income from all sources on their tax return unless it's excluded by law, regardless of whether they receive a Form 1099-K.
Taxpayers will receive Form 1099-K for business transactions, including income from:
- A business the taxpayer owns.
- Self-employment.
- Activities in the gig economy.
- The sale of personal items and assets.
What to do when a Form 1099-K is incorrect
Some taxpayers may receive an incorrect Form 1099-K for the sale of personal items, or Form 1099-K may have been issued in error such as for transactions between friends and family, or expense sharing.
If the information is incorrect on the Form 1099-K, taxpayers should contact the issuer to obtain a corrected version.
The issuing organization’s name appears in the upper left corner on the form. Taxpayers should keep a copy of all correspondence with the issuer for their records.
1099-K Reporting Threshold for 2023 Tax Year
The American Rescue Plan of 2021 changed the reporting threshold requirement for payment received by third-parties.
The IRS announced the new Form 1099-K reporting threshold starting this year, 2023.
- The prior threshold was $20,000 and 200 transactions per year. This applies to the the tax year 2022 and prior years.
- The new threshold is more than $600. This applies to tax year 2023 and future years.
If you receive a 1099-K, it is essential to file the appropriate business tax return, whether as a separate entity or as part of your personal income tax return on Schedule C. Failure to do so may result in an invitation from the IRS to comply with their annual filing requirements.