IRS Commissioner Daniel Werfel testifies earlier than a Senate Finance Committee listening to on February 15, 2023.
Kevin Lamarque | Reuters
In the event you’ve been receiving enterprise funds via apps like PayPal or Venmo or e-commerce firms like eBay, Etsy or Poshmark in 2023, your tax return might now be rather less sophisticated.
Theirs introduced Tuesday that 2023 can be a “transition yr” for a brand new tax submitting requirement affecting such funds. As soon as entered, the Kind 1099-Ok triggers solely $600 in funds, even when that revenue comes from a single enterprise transaction.
For 2023, the previous restrict of greater than 200 transactions with a complete worth of greater than $20,000 stays in impact. The company will section within the decrease threshold by including a $5,000 restrict by 2024, however has not specified a transaction restrict. The $5,000 restrict applies to tax returns filed in 2025.
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The $600 threshold will take impact for tax yr 2025, and taxpayers who exceed the restrict can count on to obtain a 1099-Ok in early 2026.
Nevertheless, enterprise funds have all the time been taxable and filers should nonetheless report 2023 revenue even when they don’t obtain a Kind 1099-Ok.
“Now we have spent many months gathering suggestions from exterior teams and others, and it has turn out to be more and more clear that we’d like extra time to successfully implement the brand new reporting necessities,” IRS Commissioner Danny Werfel stated in an announcement.
The company stated it additionally plans updates to Kind 1040, which is utilized by taxpayers to file particular person revenue tax returns, and associated schedules, to “make the reporting course of simpler.”
“This phased method is the correct factor to do for tax functions, and it’ll keep away from pointless confusion as we proceed to take a look at adjustments to the Kind 1040,” Werfel stated. “It’s clear that an extra deferment for tax yr 2023 will forestall issues for taxpayers, tax professionals and others on this space.”
The announcement comes amid a bipartisan investigation into the reporting requirement, with lawmakers and trade professionals elevating issues about taxpayer confusion. Earlier than the delay, the IRS anticipated an estimated 44 million 1099-Ks by 2023.