For Form 1099-K, reporting thresholds The amount is: $20,000? $600? $5,000? Here's What You Need to Be aware of How much is $5,000?
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 businesses whose annual revenue surpasses $20,000 of gross transactions and that have at minimum 200 transactions per calendar year. Form 1099-K is usually released the following year by the 31st of March.
Redue and Delay
As part of the American Rescue Plan Act of 2021, the threshold was dropped to $600 in total gross payments with the test of transaction count eliminated completely. But the implementation of this lower threshold has been repeatedly delayed, starting in 2022, and again 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 undetermined threshold of $5,000 that has no criteria to determine the total number of transactions. They're saying it's a gradual method of implementing the $600 threshold, but we aren't holding our breath for it. All we know is that the threshold to report for 2024 will be $5,000for a period.
It is a significant departure from the prior $20,000 and 200 transaction requirement which covered a greater range of businesses than prior to.
How Does It Impact Sellers
For 2023 sellers were only subject to 1099-K reporting when they had more than $20k in gross transactions and had more than 200 transactions. However, with the threshold being reduced to $5,000 in 2024, we expect a dramatic rise in the number of sellers receiving this form. In fact, more than 50% likely to receive this form for the very first time.
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For more information for more information, check out an IRS official statement below..
