- payment apps such as PayPal, Cash App, and Venmo;
- online auction or marketplace services such as eBay and Amazon;
- gig economy platforms such as Uber and Airbnb;
- some cryptocurrency processors such as BitPay;
- craft or maker marketplaces like Etsy;
- ticket exchange or resale sites like Ticketmaster; and
- some crowdfunding platforms.
For over a decade, TPSOs filed IRS Form 1099-K, Payment Card and Third Party Network Transactions, reporting certain payments the TPSOs processed for goods and services.
But a TPSO had to file Form 1099-K only if the recipient had:
- gross annual earnings over $20,000, and
- more than 200 transactions in the calendar year.
With these thresholds, only frequent users of TPSOs exceeded both thresholds and had their payment information reported to the IRS. If you never received a 1099-K from a TPSO that processed payments on your behalf, this is why.
That is changing
Congress drastically reduced the 1099-K filing thresholds when it enacted the American Rescue Plan Act of 2021 to require TPSOs to file Form 1099-K for any recipient who is paid more than $600 during the year with no minimum transaction requirement.
The new 1099-K filing rules were supposed to go into effect for the 2022 tax year.
But the IRS delayed them until 2023. Now, the IRS has delayed them yet again, announcing that the old rules ($20,000/200 transactions) remain in place for 2023.
For the 2024 tax year, the IRS is replacing the $20,000/200 transaction threshold with a $5,000 threshold and no minimum transaction requirement.
For the 2025 tax year and later, the IRS will apply the $600 threshold, again with no minimum transaction requirement.
Why all the delays? Because the IRS fears that TPSOs will mistakenly file many of the expected 44 million 1099-Ks. For example, TPSOs might mistakenly file 1099-Ks for personal payments from family and friends.
How We Can Help
Sterling Tax and Accounting is here to help your business with tax planning! Our comprehensive approach to tax planning helps reduce your overall tax liability and keep more money in your pocket. If all your accountant does is file your taxes, chances are they are making you pay more than your fair share of taxes.
Learn how to proactively save on taxes by scheduling a call with our tax planning specialists.
Our tax planning, accounting & business services help you stay on track. Sterling Tax & Accounting will work with you to optimize your business and minimize your taxes. We will work to provide you and your business with the tools and resources you need to build a solid tax and business foundation. We’re a trusted CPA Firm in Sarasota, Florida. We serve clients all over the US, and proactively work to minimize their taxes.
Welcome to the Sterling Standard of business! Want to learn more? Schedule a meeting with our tax planning team here: https://www.sterling.cpa/contact-us/
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