What You Need to Know About the 1099-K

What You Need to Know About the 1099-K
Whether you receive a 1099-K or not, the IRS expects you to report your taxable income. Dreamstime/TNS
Tribune News Service
Updated:
By Kelley R. Taylor From Kiplinger’s Personal Finance
Question: I’ve received payment for some of my work through a mobile payment service. I’ve heard I might need a 1099-K to report this income on my tax return. What is a 1099 and where do I get it?
Answer: An IRS 1099-K form is an IRS information reporting form. Payment networks and other providers use the form to report certain transactions from payment cards and through various payment networks. Third-party payment networks can include a range of providers that you’re likely familiar with like Venmo, PayPal, Stripe, and CashApp. And if you sell on Etsy, eBay, Depop, or other similar sites, you probably process payments through third-party networks as well.

There is a reporting threshold that triggers a 1099-K. For your 2022 tax return, that threshold is $20,000 and 200 transactions. That means that if you received $20,000 or more in payment for goods and services through a payment network and had more than 200 payment transactions during 2022, you should have received a 1099-K form from your payment network.

However, the 1099-K is supposed to report transactions for goods and services. Personal transactions, such as sending money to friends or family not in exchange for goods or services, should not be reported on the 1099-K form.

Now that we’re into 2023, a new, lower threshold applies to trigger a 1099-K. If during 2023 you receive more than $600 for goods and services through a payment network–even if you only have a single transaction of that amount–you should receive a 1099-K in early 2024. You would have to report that income on your 2023 federal income tax return.

This new, much lower threshold for the 1099-K has caused a lot of confusion and means that a lot more people who have never received 1099-Ks in the past could receive one in the future. For example, if you sell a piece of furniture on eBay for $650 and were paid through a third-party payment network and that’s your only such transaction in 2023, you could receive a 1099-K. In the past, that $650 sale would be far too small to trigger the IRS reporting form.

Whether you receive a 1099-K or not, the IRS expects you to report your taxable income. And third-party payment networks that you had transactions with that trigger the reporting threshold, will send a copy of the form to you and the IRS. So, when you receive a 1099-K, you should keep it with your tax documents and make sure that the information on the form matches your records.

(Kelley R. Taylor is tax editor at Kiplinger.com. For more on this and similar money topics, visit Kiplinger.com.)

©2023 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.
The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.