By Kelley R. Taylor
From Kiplinger’s Personal Finance
Question: Will workers paid $600 via Venmo or similar services in 2023 be receiving a 1099-K?
Answer: The Internal Revenue Service (IRS) has delayed the so-called $600 rule for 1099-K reporting again. This time, the delay is for 2023 federal tax returns, confusing payment networks, and casual online sellers. That rule would have meant that millions of people paid at least $600 for goods and services through a third-party network (think PayPal, Square, Venmo, Stripe, Cash App, etc.) would have received a Form 1099-K in January or in early February 2024.
Even though the IRS has postponed the $600 rule, you might receive a 2023 1099-K in the coming weeks. It could come from any provider that paid you through an online platform, including Etsy, StubHub, and eBay. If you receive a 1099-K, ensure it matches the information in your records. If there are problems with your form, contact the third-party payment network that sent the form.
And remember, whether you receive a 1099-K or not, the IRS expects you to report all taxable income on your federal income tax return.
Question: Are state rebate payments subject to federal taxes?
Answer: Some states in 2023 provided a state tax rebate payment, inflation relief check, or other special rebate or “stimulus” check to residents.
The IRS recently announced that it won’t challenge the taxability of most special state payments. However, the agency has said that amounts issued in some states, including Minnesota Walz checks and Arizona Families Tax Rebates, are considered taxable income.
Not having to report most special state payments on your federal income tax return is good news for many taxpayers. But, if you need clarification on whether the 2023 state payment you received is taxable, consult a tax professional before filing your federal return.
Question: Who is eligible for Free File this tax season?
Answer: You can use the IRS Free File this year if your adjusted gross income is $79,000 or less. That’s a $6,000 increase over last year’s income limit for the service.
Free File (available at
www.irs.gov) connects taxpayers with the agency’s tax preparation partners and allows taxpayers to file their federal income tax returns for free. IRS Free File has been open since January 12. If you haven’t filed your taxes yet and are interested in Free File, visit the IRS Free File site. Follow the online lookup tool prompts to find the right product for you.
(Kelley R. Taylor is tax editor at Kiplinger.com. For more on this and similar money topics, visit Kiplinger.com.)
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