1099k 2023 and beyond
IRS announces 2023 Form 1099-K reporting threshold delay for third party platform payments; plans for a $5,000 threshold in 2024 to phase in implementation
FS-2023-27, Nov. 2023
Following feedback from taxpayers, tax professionals, and payment processors and to reduce taxpayer confusion, the Internal Revenue Service delayed the new $600 Form 1099-K reporting threshold requirement for third party payment organizations for tax year 2023 and is planning a threshold of $5,000 for 2024 to phase in the new law.
Third party payment organizations include many popular payment apps and online marketplaces.
The agency is making 2023 another transition year to implement the new requirements under the American Rescue Plan that changed the Form 1099-K reporting threshold for payments taxpayers get selling goods or providing a service over $600. The previous reporting thresholds will remain in place for 2023.
What this means
This means that for 2023 and prior years, payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions. For tax year 2024, the IRS plans for a threshold of $5,000 to phase in reporting requirements.
This phased-in approach will allow the agency to review its operational processes to better address taxpayer and stakeholder concerns.
Taxpayers should be aware that while the reporting threshold remains over $20,000 and 200 transactions for 2023, companies could still issue the form for any amount.
It's important to note that the higher threshold does not affect the actual tax law to report income on your tax return. All income, no matter the amount, is taxable unless it's excluded by law whether a Form 1099-K is sent or not.
Who gets the form
The Form 1099-K could be sent to anyone who's using payment apps or online marketplaces to accept payments for selling goods or providing services. This includes people with side hustles, small businesses, crafters and other sole proprietors.
However, it could also include casual sellers who sold personal stuff like clothing, furniture and other household items that they paid more than they sold it for. Selling items at a loss is not actually taxable income but would have generated many Forms 1099-K for many people with the $600 threshold.
This complexity contributed to the IRS decision to delay the additional year to provide the agency time to update its operations to make it easier for taxpayers to report the amounts on their forms.
What to do
The IRS Understanding your Form 1099-K webpage provides resources for taxpayers who receive a 1099-K, including what to do with a Form 1099-K and what to do if you get a Form 1099-K in error.
Taxpayers who receive a Form 1099-K should review the forms, determine if the amount is correct, and determine any deductible expenses associated with the payment they may be able to claim when they file their taxes.
The payment on a Form 1099-K may be reported in different places on your tax return depending on what kind of payment it is. For example, someone who is getting paid as a ride share driver could report it on a Schedule C.
People who sold personal items must determine if the amounts on their forms were losses or gains. If taxpayers are unsure of the original price, they can learn more on how to figure out the items worth and how to establish basisPDF.
rayz-cardz
·2 years agoWe have not had to supply a 1099k form for decades on eBay. Now siceits said a 1099k is nothing more than a form? I bet to differ. Just another way for the government to watch you like a hawk. Heck there even watch it my ebay bank account. And I mean dollar for dollar and they will have a huge attitude if you don't tell them you opened up a we bank acct somewhere. They even have my bank reporting my info to them. Like I make 10s of thousands. Its right on down to like a grand to $2,500 a year. It pays for car repairs and emergency problems. Government gets daily reports. They watch what u buy and what u sell. 1099k now is just another way to keep a closer eye on us all. Never was like this til the prior president got in. Right on down to driver licenses its got. 1099k are sent to everyone now. Watchful eyes are on us all now.
rayz-cardz
·2 years agoBy the way they even watch how much cash you put in and take out of the bank. Really? They sure do. I know. They tell me the acct. Balance. Not kidding.
mam98031
·2 years agoBanks are required to report when customers deposit more than $10,000 in cash at once. A Currency Transaction Report must be filled out and sent to the IRS and FinCEN. The Bank Secrecy Act of 1970 dictates that banks keep records of deposits over $10,000 to help prevent financial crime.
https://www.sofi.com/learn/content/what-happens-if-i-deposit-more-than-10000-dollars/#:~:text=Banks%20are%20required%20to%20report,%2410%2C000%20in%20cash%20at%20once.&text=A%20Currency%20Transaction%20Report%20must,to%20the%20IRS%20and%20FinCEN.&text=The%20Bank%20Secrecy%20Act%20of,to%20help%20prevent%20financial%20crime.
https://www.usnews.com/banking/articles/if-you-deposit-a-lot-of-cash-does-your-bank-report-it-to-the-government
mam98031
·2 years agoIt is and has always been just a FORM, like any of the other 1099 forms and there is a dozen or so of them.
"Heck there even watch it my ebay bank account. " Ebay doesn't offer "bank accounts". Are you talking about your money in your Managed Payment account or your money in your bank account you have attached to your MP account? And who is "there [they]"?
Banks do not report transactions to the IRS unless you have a transaction for $10,000 or more. IRS doesn't have the staff or desire to monitor bank accounts that closely. That is some rumors being passed around by those that like to discern mis-information in an effort to upset people.
The current LAW is banks have to report to the IRS a deposit into your bank account of $10,000 or more.
mam98031
·2 years agoYou have a MAJOR misunderstand like so many others. The threshold on an IRS FORM, ANY FORM, does not set the minimum for reporting income to IRS. The 1099K is merely a FORM and nothing more.
When the minimum threshold on the FORM was 20K, that met that only those that made above that got the FORM. What it DID NOT mean was that anyone below that 20K did not have to report their income to the IRS. And that is likely what will get some people in trouble because they assumed something that was not ever based in FACT. IRS does NOT HAVE a minimum requirement on reporting your income. So even when the FORM threshold was 20K, those that made 15K, 10K, 5K, 1K, etc. were still responsible for reporting their income.
Everyone needs to remember that the 1099K is ONLY A FORM and nothing more. It does NOT set the minimum requirements to report income to the IRS. That would be like saying if you don't receive a 1099K for ANY type of income you receive, you don't have to report your income and that is ridiculous. The 1099K only covers internet related payments. It doesn't cover when people are paid by check or any other form. So to think that the 1099K has the power to set the minimum standard for all of IRS, all those people that are NOT paid via the internet would not have to claim their income, which we all should know is not true.
tools*
·2 years agoAmericans' inability to distinguish between the receipt of a form and their legal obligations makes me wonder if they could possibly bring back The Creature in 2024 thinking it will somehow benefit them. If so, it's been fun living in a free society. Don't forget to tip your waiters.
mam98031
·2 years ago@tools*
I have no idea what you are talking about nor do I know what " The Creature in 2024" even means.
tools*
·2 years agoBeelzebub; The Prince of Darkness; The Orange Menace; The Flabulist.
mam98031
·2 years agoEnglish would be good.
ljsj2757
·2 years agoso why has ebay not made this announcement.. are they planning on sending them out anyway even if they dont have to.
nobody*s_perfect
·2 years agoLast year, eBay eventually made an announcement 6 days after the IRS announcement, and then had no problem sticking with the $20K threshold. I can't recall ever hearing that somebody got a 1099-K from eBay when they hadn't met the relevant federal or state threshold.
dbfolks166mt
·2 years agoLast year, eBay eventually made an announcement 6 days after the IRS announcement, and then had no problem sticking with the $20K threshold. I can't recall ever hearing that somebody got a 1099-K from eBay when they hadn't met the relevant federal or state threshold.
Initially they had some problems with CA sellers that had not reached the threshold but were issued 1099's anyway. EBay, to the best of my knowledge, never posted the cause or the glitch that caused the issue but I suspect it had something to do with sorting out the individual state laws and those sellers that hey had to issue 1099's to even though they had not met the $20K federal threshold for the year but had met the state one.
nobody*s_perfect
·2 years agoAh yes, I should have remembered that -- I guess I had filed it away as a state-level error rather than an individual's problem. But IIRC, it was caught and corrected before eBay had transferred the info to the feds.
dbfolks166mt
·2 years agoAh yes, I should have remembered that -- I guess I had filed it away as a state-level error rather than an individual's problem. But IIRC, it was caught and corrected before eBay had transferred the info to the feds.
Yes I do remember that they caught it before the 1099's were actually released to the IRS. However, this is what concerns me about the delay and any other changes at the Federal level. It is possible that in 2024 more individual states may pass their own reporting threshold laws given the Fed's inability to get this done. It is HIGHLY probable that this will still be a quagmire at the end of 2024 but may be further complicated by additional state laws that have no consistency from state to state. We could wind up with 51 different state/district laws and one Federal law.
nobody*s_perfect
·2 years agoWell, it won't be as bad as 51 different threshold policies because (1) some states don't have an income tax; and (2) DC and about 6 of the states that already have lower thresholds have set theirs at the same amount -- $600 with no minimum number of transactions (i.e., identical to the federal level that is being implemented slooooowly).
dbfolks166mt
·2 years agoWell, it won't be as bad as 51 different threshold policies because (1) some states don't have an income tax; and (2) DC and about 6 of the states that already have lower thresholds have set theirs at the same amount -- $600 with no minimum number of transactions (i.e., identical to the federal level that is being implemented slooooowly).
Good point and great example. I had forgotten about the 9 states that don't have income tax. In theory the individual state laws and the Federal law regarding the threshold issuance level and transaction numbers will possibly align provided the Fed's get their act together and don't actually change the original $600 limit.
Government, by design, was never meant to be efficient or expeditus and they have no clue of the KISS principle. This whole 1099 thing is a perfect example. 😂
mam98031
·2 years agoBut none of those were actually sent to the IRS. Ebay caught the error before that happened.
lenaonce369
·2 years agoI got request from ebay for SSN for 1099 form even my sales are below $600.
mam98031
·2 years agoIf you are going to sell on Ebay, you have to give them your SSN or you won't get your money. It isn't because of an IRS requirement, it is because of a Federal law. Since Ebay is the money processor now, they have to follow certain rules on verifying your identity. Your SSN is part of that verification process so they comply with the federal banking laws, Patriots Act and the anti money laundering laws.
mam98031
·2 years agoIt is a good question, but don't assume it means they are going to still send the forms for those with $600 moving through Ebay. We simply don't know when or if they will make an announcement.
fulltilt06
·2 years agoSeems so. I just received a notice to send them my SSN to get payout for sales that were around $1000 total. I'm in Pa.
dotllama
·2 years agoAn Ebay rep just told me on the phone that within the next few weeks (very soon) they will be requiring SS #'s from ALL Ebay sellers regardless of how many $ worth of merchandise they sell in any given year. I don't like it that Ebay is going to start requiring SS #'s in instances where it is not required by law. I see Ebay as just another place with my SS# floating around and making me more subject to being hacked. From a search of the internet it appears that Ebay has been hacked before. I don't think it will be worth the risk to release my SS # to Ebay as I am just an occassional seller cleaning out my house and not making any profit.
nobody*s_perfect
·2 years agoeBay reps give out lots of misinformation. Don't let this tidbit ruin your day.
mam98031
·2 years ago@dotllama
The CSR you spoke with is incorrect. Ebay has been requiring our SSN for a couple years now. When Ebay became our money processor there were more laws in which they had to comply with. One of those was how they had to verify the ID of each person with an account. So you can see it is required by law. Ebay is doing what they have to do to comply with current laws.
https://www.irs.gov/irm/part4/irm_04-026-005#idm140052578029968
OMG you could have saved yourself a lot of concern if you had read the articles regarding the 2014 hacking of Ebay. You would have quickly realized that they got ZERO financial info on any member because the hackers could not breach the encryption coding of Ebay. Ebay protected everyone.
But of course it boils down to your choice. You don't have to sell here. You will however find that on any other site that processes the money, you will have to provide it to them if you want to sell on that site.
dotllama
·2 years agoI have been selling on Ebay for the last couple of years without providing my SS#. So I would imagine that Ebays customer service was correct in saying that providing a SS# is something new that Ebay is planning to impose on low volume sellers like myself. It appears that I was correct in making that statement that Ebay got hacked. Even Experian was hacked and the hackers got lots of SS #'s. So it should come as no surprise if someone eventually compromises Ebay and obtains your SS#.
mam98031
·2 years agoI have no answer for you. You seem to have slipped through somehow but I would not know how.
Yes, I said there was a hacking of Ebay in 2014. It is not a secret and has been well covered over the years. Something however you should be aware of is that this is not Experian and what happened to Experian does not mean that happened to Ebay. Two completely different companies.
As I explained in my other post to you @dotllama, Ebay did not lose ANY, ZERO, ZIP financial info to any of the hackers because while they were able to get into the system they were unable to break the encryption codes to access financial info on members.
So you are welcome to be concerned because Experian lost financial info to hackers, but it is unfair to put that on Ebay as they did not lose any financial info to hackers. In fact you were PROTECTED.
Now that is not to say Ebay can't get hacked at a higher level. That can happen to any site and any time. All internet sites risk being hacked.
dbfolks166mt
·2 years agoAn Ebay rep just told me on the phone that within the next few weeks (very soon) they will be requiring SS #'s from ALL Ebay sellers regardless of how many $ worth of merchandise they sell in any given year. I don't like it that Ebay is going to start requiring SS #'s in instances where it is not required by law. I see Ebay as just another place with my SS# floating around and making me more subject to being hacked. From a search of the internet it appears that Ebay has been hacked before. I don't think it will be worth the risk to release my SS # to Ebay as I am just an occassional seller cleaning out my house and not making any profit.
Fortunately, at least in the short term, you have other options but at some point this is probably going to become standard across all ecommerce sites and for any third party financial processor like PayPal, Venmo, Google Pay, Stripe............
dbfolks166mt
·2 years agoWell you got the Federal plan and we all know how well their plans have worked for the last two years. I am more interested in seeing what the individual states do in 2024 and how many pass their own reporting/issuance levels. At the present time I believe there are 8 states + DC that the Federal level means nothing since they have already established their own laws. Interestingly enough the 1099 is a Federal document so the IRS is already getting the lower threshold 1099's and have been for several years.
toomuchstuffagain35
·2 years agoI wish ebay would make a board JUST for any thread with 1099K.
It's beyond "getting old" by now.
heckofagame
·2 years agoAnd a reminder to all: even if you do not receive a 1099-k, you are still required to report your income from eBay sales.
700silverv
·2 years agoWell, if you are using Ebay as an online garage sale and only selling personal items at a loss then the IRS says you do not have to report that as it is not profit.
12345jamesstamps
·2 years agoI agree with you. Those who sell on eBay as a source of income and have a ton of items for sale are not the same as the occasional seller selling a few items a month.
mam98031
·2 years agoThat is going to depend. You may need to report the them, but you won't have any tax impact because of it now will you be able to take the loss as a credit. But you may have to still report it, so make sure and research this before assuming you don't have to report.
700silverv
·2 years agoWell unless something has changed, that is the IRS's stance, but if you receive a 1099k then you need to do your return correctly, that's why cash is king until you can no longer use it.
mam98031
·2 years ago@700silverv
You need to do your return correctly with or without a 1099K.
You have a MAJOR misunderstand like so many others. The threshold on an IRS FORM, ANY FORM, does not set the minimum for reporting income to IRS. The 1099K is merely a FORM and nothing more.
When the minimum threshold on the FORM was 20K, that met that only those that made above that got the FORM. What it DID NOT mean was that anyone below that 20K did not have to report their income to the IRS. And that is likely what will get some people in trouble because they assumed something that was not ever based in FACT. IRS does NOT HAVE a minimum requirement on reporting your income. So even when the FORM threshold was 20K, those that made 15K, 10K, 5K, 1K, etc. were still responsible for reporting their income.
Everyone needs to remember that the 1099K is ONLY A FORM and nothing more. It does NOT set the minimum requirements to report income to the IRS. That would be like saying if you don't receive a 1099K for ANY type of income you receive, you don't have to report your income and that is ridiculous. The 1099K only covers internet related payments. It doesn't cover when people are paid by check or any other form. So to think that the 1099K has the power to set the minimum standard for all of IRS, all those people that are NOT paid via the internet would not have to claim their income, which we all should know is not true.
12345jamesstamps
·2 years agoAnd a reminder to all: there are many deductions you can report when doing your taxes from selling on eBay sales.
magicjohnsonsvariety
·2 years agoIt already mentions this in the announcement...