The IRS has postponed the new Form 1099-K reporting requirements once again. Originally, starting in 2022, third-party settlement organizations (TPSOs) like PayPal, eBay, Etsy, and Venmo were supposed to issue Forms 1099-K if an individual received $600 or more in payments. Before this change, TPSOs were only required to issue Forms 1099-K if a taxpayer received over $20,000 and had more than 200 transactions.
However, the IRS postponed implementing the new lower threshold to the 2023 tax year. Then, in late 2023, the IRS announced another delay, pushing the $600 threshold implementation to the 2025 tax year. The 2024 tax year will serve as a transition period, with the threshold for issuing Form 1099-K set at $5,000.
Despite the postponement of the $600 threshold until the 2025 tax year, some taxpayers may still receive Form 1099-K based on this lower amount. It is crucial to include any Form 1099-K you receive in your income for the year, regardless of whether the TPSO was required to issue it. Failure to do so can result in letters from the IRS and potential penalties.
Stay informed and ensure you comply with these reporting requirements to avoid any issues with your tax returns.