If you’re a frequent user of payment platforms like Venmo and PayPal, you’ll be happy to know that the IRS has recently revised their guidance on reporting requirements for these platforms.
Last year, the IRS announced that platforms like Venmo and PayPal would be required to send Form 1099-K to anyone who earned $600 or more on the platform in 2022. However, just before the holidays, the IRS reversed course and made a change to their guidance.
Starting in 2022, payment platforms will only be required to provide 1099-Ks to those who earned at least $20,000 from 200-plus transactions on the platform. This decision was made to “help smooth the transition and ensure clarity for taxpayers, tax professionals, and industry.”
This update is great news for everyday Americans who use payment platforms for regular transactions and were worried about confusion with the new $600 threshold. Tax professionals were also concerned about personal transactions getting caught up in the reporting requirements.
It’s important to note that those who do not meet the $20,000-plus/200-plus transaction threshold may no longer receive a 1099-K from the payment platforms, but they still have a legal obligation to report any taxable income.
Some platforms may have already sent out 1099-Ks based on the previous guidance, so there may be some confusion in the coming weeks. The IRS will soon release advice for those who have received 1099-Ks but no longer meet the form threshold. Our team will be keeping a close eye on this and will keep you updated.
If you have any questions or concerns about this change, please don’t hesitate to reach out. We’re always here to help.
