IRS warns taxpayers of new $600 threshold for reporting third-party payments
Companies file 1099-ks on a yearly basis to report third-party payments and send copies to both the taxpayers and the IRS.
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The IRS this week warned taxpayers about its new $600 reporting threshold for third-party payments and the need to fill out a 1099-K form should taxpayers exceed that limit.
In 2021, Congress dropped the reporting threshold from 200 transactions worth a total $20,000 down to just one transaction over $600 as part of the American Rescue Plan, CNBC reported.
That threshold will likely have implications for regular users of Venmo, Paypal, or other payment apps.
The Joint Committee on Taxation estimates that the provision will raise $8.4 billion over ten years, the outlet noted.
Companies file 1099-Ks on a yearly basis to report third-party payments and send copies to both the taxpayers and the IRS. Accordingly, many individuals will likely receive a 1099-K by accident, over a non-taxable personal transaction.
Should that occur, the IRS advises taxpayers to contact the company to fix the error and, should they fail to do so, file a correct tax return and provide a written explanation to the agency.
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