BPrior to this calendar year, individuals in United State You were only required to fill out Form 1099-K if the total number of third-party transactions exceeded 200 for the year and the total amount exceeded $20,000.
However, after the 2021 American Rescue Plan (ARPA) vote, the Internal Revenue Service (IRS) lowered the reporting threshold.
“The Internal Revenue Service reminds taxpayers who earn income from the sale of goods and/or the provision of services that they may receive Form 1099-K, Payment Card and Third-Party Network Transactions for Payment Card and Third-Party Payment Network Transactions greater than $600 for the year,” it reads. IRS Web site.
Should you report income of less than $600?
While the IRS makes it clear that all income over $600 must be reported, there is a misconception that taxpayers do not need to report earnings less than the above amount.
However, this is not true, as you may not receive a Form 1099-K, but still have to file a tax return because all earnings are taxable.
“There is no change in being taxable on income; the only change is to the reporting rules for Form 1099-K,” the IRS press release reads.
As before, income, including from part-time work, side jobs, or the sale of goods, is still taxable. Taxpayers must report all income on their tax return unless excluded by law, whether they receive Form 1099-NEC. , non-employee compensation; Form 1099-K; or any other information return.
“The IRS confirms that money received through third-party payment applications from friends and relatives as personal gifts or reimbursement of personal expenses is not taxable.”
Meanwhile, the IRS has encouraged American taxpayers to visit the Get Ready web page where they will find specific tips, as well as several online tools and resources that will help them get organized before filling out their 2022 federal tax return.