IRS Commissioner Daniel Werfel testifies earlier than a Senate Finance Committee listening to on Feb. 15, 2023.
Kevin Lamarque | Reuters
If you happen to acquired business payments by way of apps equivalent to PayPal or Venmo or e-commerce corporations equivalent to eBay, Etsy or Poshmark in 2023, your tax return could now be rather less sophisticated.
The IRS announced Tuesday that 2023 could be a “transition yr” for a brand new tax reporting requirement affecting such funds. As soon as in place, it’s going to set off Form 1099-K for simply $600 in funds, even when that earnings stemmed from a single enterprise transaction.
For 2023, the previous restrict of greater than 200 transactions price an mixture above $20,000 will stay in place. The company will part within the decrease threshold by including a $5,000 restrict for 2024, but it surely did not specify a transaction restrict. The $5,000 restrict will apply to tax returns filed in 2025.
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The $600 threshold will go into impact for tax yr 2025, and taxpayers over the restrict can anticipate to obtain a 1099-Okay firstly of 2026.
Nonetheless, enterprise funds have at all times been taxable and filers ought to nonetheless report 2023 earnings even when they do not obtain a Kind 1099-Okay.
“We spent many months gathering suggestions from third-party teams and others, and it grew to become more and more clear we’d like further time to successfully implement the brand new reporting necessities,” IRS Commissioner Danny Werfel mentioned in an announcement.
The company mentioned it additionally plans on updates for Kind 1040, which is utilized by taxpayers to file particular person earnings tax returns, and associated schedules, to “make the reporting course of simpler.”
“Taking this phased-in method is the correct factor to do for the needs of tax administration, and it prevents pointless confusion as we proceed to take a look at adjustments to the Kind 1040,” Werfel mentioned. “It is clear that an extra delay for tax yr 2023 will keep away from issues for taxpayers, tax professionals and others on this space.”
The announcement comes amid bipartisan scrutiny of the reporting requirement, with lawmakers and trade professionals citing issues about taxpayer confusion. Previous to the delay, the IRS was anticipating an estimated 44 million 1099-Ks for 2023.