Video: 1099-K Form Reporting Delay: Everything You Need to Know
The IRS announced a delay in the 1099-K reporting threshold. Lisa Greene-Lewis, CPA and TurboTax tax expert, explains what you need to know for your 2022 taxes.
The IRS is gradually phasing in new 1099-K reporting requirements for payments from third-party processors like Venmo and Paypal. In 2021, Congress changed the reporting threshold from over $20,000 in payments and more than 200 transactions to over $600 in payments regardless of the number of transactions. But instead of using the new $600 threshold right away, the IRS applied the previous reporting threshold for the 2022 and 2023 tax years. For the 2024 tax year, the IRS is using a $5,000 threshold, regardless of the number of transactions. The threshold will drop to $2,500, regardless of the number of transactions, for the 2025 tax year. Starting in 2026, the $600 threshold will apply.
Video Transcript:
[00:00:00.00] [MUSIC PLAYING]
[00:00:04.46] TRACY BYRNES: If you use Venmo, PayPal, Cash App, listen up, because at one point, we thought you were getting a tax document, a 1099-K. Think of it, K for cash. Now, you might not be. Lisa Greene-Lewis, TurboTax expert and CPA, is here with us right now. Lisa, I was getting nervous about this, because I know my kids use Venmo and PayPal so much. So I was presuming they were going to have a reporting requirement, but maybe not so much.
[00:00:30.97] LISA GREENE-LEWIS: Yes, a lot of people were worried about this, like millions more tax filers may have received this form. But on December 23, the IRS ruled to delay the reporting requirement. So, the reporting requirement was going to go to, if you had over $600 in third party provider transactions, you would get a Form 1099-K. But that delay made it, so you will not get one unless you have over 200 transactions and $20,000, so a lot more transactions and money before you would see this form.
[00:01:11.19] TRACY BYRNES: I'm actually even thinking of, like, people that pay alimony to each other. They probably Venmo it these days. They might very well get a 1099-K because of it.
[00:01:21.15] LISA GREENE-LEWIS: That could be possible, but I know the IRS and third-party providers, they are kind of tracking who is a business and who is not. Like if you go into your Venmo app, you can kind of-- they have an area for businesses.
[00:01:36.06] TRACY BYRNES: I get that. OK, so if I indeed do get a 1099-K, what do I do with it? I have to report it, I'm guessing, somewhere.
[00:01:42.30] LISA GREENE-LEWIS: Yes, you do have to report it, especially if you're self-employed. And one thing to point out, this isn't a new tax law. Self-employed were always supposed to report their net income if it's $400 or more. And regardless, any income, you're supposed to report it, so it's just a reporting requirement for the third-party providers. They would be the ones that would be sending you these forms. You would report whatever's on that form. Remember, if you're self-employed, though, there are tons of deductions that can lower your overall income and lower the taxes you pay.
[00:02:23.44] TRACY BYRNES: And the other thing you pointed out, though, was that some states actually still were giving these 1099-K's out. How come?
[00:02:30.79] LISA GREENE-LEWIS: Yeah, it depends on the state if they've had conformity with the delay that the IRS issued. So it just depends on the individual states.
[00:02:43.82] TRACY BYRNES: OK, so bottom line is, if you sold an item on eBay or something, you will get a 1099 if, indeed, you crossed that threshold. If it's $600, though, you probably will not.
[00:02:58.13] LISA GREENE-LEWIS: Yes, you probably will not. One thing to point out, people don't realize that, if you sell personal items on eBay, you are supposed to report those, even though most people do have a lot. I mean, most of the time, they sell it for less than what they bought it for. So tax wise, there wouldn't be anything to worry about if you had a loss.
[00:03:21.75] TRACY BYRNES: All right, so if I'm surprised and I get this 1099-K in the mail, what do I do with it?
[00:03:26.25] LISA GREENE-LEWIS: One thing, you don't have to worry with TurboTax. You can snap a picture of your 1099-K, and the information from your 1099-K goes to the right tax form.
[00:03:39.14] TRACY BYRNES: Lisa Greene-Lewis, TurboTax expert and CPA, thank you for helping us straighten that out. Pay attention if you get a 1099-K. Thank you, Lisa.
[00:03:48.11] LISA GREENE-LEWIS: Thank you.
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