For Form 1099-K, reporting thresholds The amount is: $20,000? $600? $5,000? This is What You Must Learn $5,000? Here's What You Need to Know
1099-K Reporting
Form 1099-K is used by third-party platforms and settlement organisations (including the most popular payment applications and online marketplaces) for reporting payments to businesses whose annual revenue surpasses $20,000 of gross transactions and that have at minimum 200 transactions during a calendar year. The forms are usually issued in the year following by March 31.
Reduce and Delay
In the American Rescue Plan Act of 2021, the threshold was dropped to $600 in total net payments, and the transaction count test scrapped completely. But the implementation of this reduced threshold has been delayed several times, initially in 2022 before being reintroduced in 2023. What's next in 2024?
The Scoop in 2024
In the last quarter of 2013, the IRS all but scrapped the $600 threshold and instead landed on an unintentional $5,000 threshold, with no test for total transaction count. They're declaring it to be a phased approach of the $600 threshold however we're not holding our breath for it. We do know that the threshold to report for 2024 will be $5,000for a period.
It is a significant departure from the earlier $20,000 and 200 transaction requirement that covered a larger number of retailers than before.
What Does This Mean for Sellers
The year 2023 was the last time sellers could only be subject to 1099-K reporting when they had more than the threshold of $20,000 in total payments, and had more than 200 transactions. However, with the threshold dropping to $5,000 for 2024, we expect a significant increase in the amount of sellers who will be receiving this form. In fact, more than half likely receiving this form for the very first time.
At , we stay up with the constant shifts in tax rules and regulations so that you don't have to keep up, and you can focus on growth while we manage the complexities of global tax.
For more information, you can view the IRS's official announcement on this page.
