IRS Form 1099-K: You Might Not Get One From Venmo, PayPal, or Cash App For 2022
The IRS has delayed the $600 reporting threshold for IRS Form1099-K involving payment networks like Venmo, PayPal, Amazon, Square, and Cash App.
If you got paid more than $600 in 2022 for goods or services through a third-party payment network like Venmo, PayPal, Amazon, or Square, then due to a changed tax reporting rule, you were set to receive an IRS Form 1099-K from your payment network in January—even if you had never received a 1099-K in the past. That’s because the 1099-K tax reporting rule required third-party payment networks to send a 1099-K if those payments exceeded a new $600 reporting threshold.
But just before the holidays, the IRS delayed the implementation of the so-called $600 rule. So, third party payment networks won’t have to report at the lower threshold until 2023.
So, what does this mean for you if you got paid for your art through a third-party payment network? The “$600 rule” means that if are paid through a wide-range of networks and apps like Venmo, Amazon, Square, and PayPal, (to name just a few), will eventually receive a 1099-K Form. But it’s important to note that the new reporting threshold didn't (and doesn’t) change the fact that the IRS has always required taxpayers to report all taxable income, whether they receive a 1099-K form or not.
So, for now, this new delay of the $600 threshold means that a former, higher $20,000 threshold will still apply for goods and services that you received payment for through third-party payment networks in 2022.
However, since the $600 rule is a key tax reporting change that could come around again in 2023,
What Triggers a 1099-K?
Previously, to receive a 1099-K from a third-party payment network, you had to exceed $20,000 in transactions for goods and services and have more than 200 business transactions in a year. So, for 2022, that $20,000 threshold will apply. That's because the IRS is delaying the new $600 threshold for one year.
Will You Get a 1099K From Venmo, PayPal, or Cash App?
Some people are wondering if they will receive a 1099-K from Venmo, or PayPal for 2022. The answer is maybe. Yes, the IRS is delaying the $600 rule tor the 2022 tax year, so not as many people will receive a 1099-K for 2022. But Venmo, PayPal, Amazon, Square, Cash for Business through Cash App, and other third-party payment network providers, like Stripe, are still required to report payments for goods and services to the IRS on Form 1099-K when those payments exceed the previous $20,000 threshold.
Businesses that are required to report your income over $20,000 also include popular sites like Etsy, StubHub, Depop, Poshmark, etc. If you're unsure about whether you will receive a 1099-k, most of these sites have questions and answers on their websites that can help.
IRS 1099-K Delay: Do You Have to Report a $600 Income?
The IRS is delaying the $600 threshold reporting requirement for the 1099-K for 2022. But normally, any 1099-K Form will go to you and to the IRS. So, the likelihood that the IRS will notice a difference on your federal income tax return between your income reporting, and the reporting on your 1099-K form, (if there are differences) is relatively high.
Also, the IRS requires taxpayers to report all taxable income, so it’s best to report your taxable income and to keep good records that substantiate that income.
As always, check with your accountant. This is an informational article, not legal or financial advice.