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1099-K
Form 1099-K is an IRS information return used to report certain payment transactions for goods and services. It is not a new form, but legislative changes in March 2021 significantly decreased the filing threshold that was originally scheduled to be implemented for the tax year 2022 but has been delayed. The IRS has announced that 2024 will be the final transition period for Form 1099-K. The threshold for 2024 will be $5,000; 2025 will be $2,500 and 2026 and after will be $600.
The Form 1099-K reports payments and transactions for goods and services from online platforms, apps and payment card processors (such as Venmo or PayPal). Note that the changes to the reporting threshold are NOT intended to track personal transactions, such as sharing the cost of a meal, gifts or reimbursement for personal expenses.
PayPal and Venmo offer the option to tag their transactions as either personal/friends and family OR goods and services by choosing the appropriate category for each transaction. Note that if you are selling a personal item, such as concert tickets, this should be considered a goods/services transaction. Ensure that business transactions and personal transactions are kept separated within the third-party platform.
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