1099K

[i_am_not_obsolete]

Just read following. Does it mean we're back to 20K for tax year 2025?

Tax Bill Changes 1099 Reporting Thresholds

By William Hays Weissman

The “One Big Beautiful Bill Act” signed into law on July 4, 2025, makes two important changes to tax reporting requirements that should be of interest to employers. 

1099 Reporting Threshold Increased to $2,000 and Indexed for Inflation

Payments to non-employees for personal services must be reported on an “information return,” commonly called a Form 1099-NEC, if the payment is $600 or more in a calendar year. Similarly, payments of non-wages, such as for a settlement that includes penalties or emotional distress-type damages, are reportable on Form 1099-MISC if the payment is $600 or more.1 

Beginning in 2026, however, Section 70433 of the new Act increases the $600 threshold to $2,000, which will then be adjusted for inflation beginning in 2027. In addition, requirements relating to backup withholding – required when the payee fails to provide a valid Form W-4 or Form W-9 using the taxpayer’s correct taxpayer identification number – will similarly be increased to $2,000 and then also be indexed for inflation beginning in 2027. 

While amounts below the new reporting thresholds will still constitute income subject to taxation, an employer will no longer be required to issue a 1099 or engage in backup withholding at the lower amounts. This could significantly reduce the number of 1099s that employers are required to issue.

Form 1099-K Reporting Reverts to Original Thresholds

Another important tax reporting change addresses third-party network reporting, which is required on Form 1099-K.2 When such reporting was originally enacted, there was a de minimis exclusion from required reporting if the total amount of such payments was less than $20,000 and involved fewer than 200 transactions. The American Rescue Plan Act of 2021 eliminated the transaction requirement entirely and reduced the reporting threshold to $600, with these changes originally intended to take effect in 2022. The IRS delayed implementation of these changes, most recently stating that it would impose a $2,500 threshold for 2025. Section 70432 of the new Act, however, reinstates the $20,000 and 200 transactions thresholds for required reporting, retroactive to 2022. The Act also applies these standards to backup withholding requirements, effective for 2025. 

These adjustments appear to be good news for employers and businesses that regularly make such payments because they should substantially reduce their administrative burdens, particularly with respect to payments made to independent contractors.

[powell-collectibles]

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@mam98031 wrote:

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@powell-collectibles wrote:

@mam98031 

I’m sorry – but you are misreading things. The percentage of total numbers as they go from left to right are cumulative. Yes, the top 50% pay something like 97%. The top 25% pay 87%. That tells you that the number is between 25 and 50 - a quarter of the population - Pays 10%.  Absolutely, the top 50% pay almost all the income tax. But most of that is from those in the top 25%.

The only numbers in your chart that aren’t cumulative are at the very right – but notice it reads “bottom 50%.”

Don’t worry so much about being right. Personally, I like it when I’m wrong – that’s when I learn something.

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I don't.  Because you say that is how I see things doesn't make it right.  It only makes it your opinion.  I don't particularly "worry" about stuff around here.  Usually I present information, you put your twist on it and then post.  Sometimes you are right and sometimes it is a complete fabrication.  Do what you will with the information provided, it really doesn't matter to me.

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This just went into a weird space.  It isn’t opinion.  What you posted is pretty clear - you just don’t understand it.  If the top 25% pay 87% of income tax, and the top 50% pay 97%, that absolutely means that those from 25.000000001 to 50% pay just 10%.  I can’t change the rules of math.  You are just plain wrong - it is okay to not understand something.  

[12345jamesstamps]

Money owed in taxes is offset by deductibles...and if you have enough of deductibles it amounts to the USA collecting nothing.

Sure the companies owe taxes before doing deductibles.

Like Apple headquarters in California...tax declaration was in Cork, Ireland but later switch to Channel island of Jersey .

[powell-collectibles]

@mam98031 

At first, I thought that you were pretending not to understand your chart.  It occurred to me that you might genuinely be unfamiliar with some basic math principles.  I hope that the below helps dispel the notion that the middle class pays the majority of income taxes.  Please rest assured that the below is not a "complete fabrication."  Nor is there any Hollywood wizardry used to confuse anyone.  

Table 1. Summary of Federal Income Tax Data, Tax Year 2022
	Top 1%	Top 5%	Top 10%	Top 25%	Top 50%	Bottom 50%
"Name"	Super Rich	Rich	Wealthy	Upper Class	Middle Class	Poor
Number of Returns	1,538,014	7,690,070	15,380,140	38,450,349	76,900,699	76,900,699
Average Tax Rate	26.09	23.07	21.11	18.06	15.87	3.74
Average Income Taxes Paid	$561,523	$169,466	$99,971	$48,433	$26,959	$822
Adjusted Gross Income ($ Millions)	3,309,589	5,647,825	7,282,111	10,310,488	13,060,814	1,691,006
Share of Total Adjusted Gross Income	22.40%	38.30%	49.40%	69.90%	88.50%	11.50%
Income Taxes Paid ($ Millions)	863,631	1,303,206	1,537,563	1,862,269	2,073,129	63,203
Share of Total Income Taxes Paid	40%	61%	72%	87%	97%	3%
Share WITHIN Bracket	40%	21%	11%	15%	10%	3%
Income Split Point	$663,164	$261,591	$178,611	$99,857	$50,339	$50,339

To make this easy and clear for most to understand, I’ve added 1) names to each income group; 2) the “share within bracket,” which simply shows the amount of income tax that the individual group pays, as a total of all income tax collected.  On that “share within bracket,” you’ll see that the Super Rich pay 40% of the income tax, and the Middle Class pays 10%. 

That might clear it up for you.  If not, I’ve come up with this easy-to-understand example:

A town has one hundred (100) people, and collects $100 in income tax.  This is a small town, so at a mandatory town hall, the mayor asks for the treasurer to explain taxes.  The treasurer separates the residents into the groups Super Rich, Rich, Wealthy, Upper Class, Middle Class, and Poor. Here are the totals for each group:

• Super Rich: 1
• Rich: 4 (running total: 5)
• Wealthy: 5 (10)
• Upper Class: 15 (25)
• Middle Class: 25 (50)
• Poor: 50 (100)

The treasurer then tells the mayor what was collected.  From the Super Rich, $40 was collected.  Wow – 40% of all tax revenue from one person!  Next up are the four Rich - $21.  Wow – up to $61 from both groups! Already way past half of all tax revenue!  Then, the Wealthy and the Upper Class – twenty people (5 and 15, respectively), 26% taxes (11% and 15%, respectively).  We’re up to 87% of the taxes from these four groups!

NOW, we get to the middle class.  That’s who you state pays the majority of the income tax.  I assume that you meant middle class and under.  Please note that we’ve already accounted for $87 of the $100 collected – Middle Class and Poor combined pay $13.   75 people in that town of 100 pay 13% of the income tax.  Truly, a huge distance away of paying for the majority.  

I hope I made this simple enough, and hopefully, the highlighted lines on the chart that you provided helps you to understand the numbers

[powell-collectibles]

No, companies use deductibles to determine taxes owed.  It isn't hard to find numbers from audited income statements.  Sure, plenty of companies use smart tactics to minimize taxes.  Some companies are well suited for this.  BUT, the truth is there isn't a way out of paying large amounts of corporate income tax for most companies.  It really takes a certain set of circumstances to really get away with super-low taxes.  For those that haven't worked for a company that has one of these setups, understood that the few stories that grab the headlines make it look easy and super common, but it isn't.