1099k 2023 and beyond

[jaxsupply14]

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.

[mam98031]

---

@700silverv wrote:

Well, 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.

---

That 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.

[mam98031]

---

@ljsj2757 wrote:

so why has ebay not made this announcement.. are they planning on sending them out anyway even if they dont have to.

---

It 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.

[mam98031]

---

@nobody*s_perfect wrote:

Ah 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.

---

But none of those were actually sent to the IRS.  Ebay caught the error before that happened.

[mam98031]

---

@lenaonce369 wrote:

I got request from ebay for SSN for 1099 form even my sales are below $600. 

---

If 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.

[dbfolks166mt]

Well, 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. 😂

[fulltilt06]

Seems 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]

An 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]

eBay reps give out lots of misinformation. Don't let this tidbit ruin your day.

[mam98031]

---

@dotllama wrote:

An 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. 

---

@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.

[tools*]

Americans' 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]

---

@tools* wrote:

Americans' 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.

---

@tools* 

I have no idea what you are talking about nor do I know what " The Creature in 2024" even means.

[tools*]

---

@mam98031 wrote:

---

@tools* wrote:

Americans' 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.

---

@tools* 

I have no idea what you are talking about nor do I know what " The Creature in 2024" even means.

---

Beelzebub; The Prince of Darkness; The Orange Menace;  The Flabulist.

[mam98031]

---

@tools* wrote:

---

@mam98031 wrote:

---

@tools* wrote:

Americans' 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.

---

@tools* 

I have no idea what you are talking about nor do I know what " The Creature in 2024" even means.

---

Beelzebub; The Prince of Darkness; The Orange Menace;  The Flabulist.

---

English would be good.

[magicjohnsonsvariety]

---

@heckofagame wrote:

And a reminder to all: even if you do not receive a 1099-k, you are still required to report your income from eBay sales. 

---

It already mentions this in the announcement...

[dotllama]

I 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#.