Form 1099-K Reporting Thresholds: $20,000? $600? $5,000? Here's What You Need to Learn How much is $5,000?
1099-K Reporting
Form 1099-K is utilized by third-party platforms or settlement organisations (including popular payment apps and online marketplaces) for reporting payments to businesses whose annual revenue is greater than $20,000 in total payments and has at least 200 transactions per calendar year. The forms are usually issued in the year following on the 31st of March.
Reduce and Delay
In the American Rescue Plan Act of 2021, the threshold was reduced to $600 for all net payments, and the transaction count test scrapped completely. But the implementation of this reduced threshold has been repeatedly delayed, first in 2022 and then again in 2023. What's next in 2024?
The Scoop on 2024
In the last quarter of 2013, the IRS all just scrapped the $600 threshold and instead landed on an undetermined threshold of $5,000 that has no criteria for the number of transactions. The IRS is declaring it to be a phased method of implementing the $600 threshold, but we aren't holding our breath for it. What we do know is the threshold for reporting in 2024 will be $5,000- - for the duration.
This is an important change from the prior $20,000 and 200 transaction requirement which covered a greater number of retailers than before.
How Does It Impact Sellers
In 2023, sellers were only subject to 1099-K reporting when they had more than the threshold of $20,000 in total payments, and 200 transactions. With the threshold dropping to $5,000 for 2024, we expect a significant increase in the amount of sellers who will be receiving this form. In fact, more than 50% likely to receive this form for the very first time.
At , we stay up with changes to tax laws and regulations to ensure that you don't need to keep up, and you can concentrate on your growth while we manage the complexities of international tax.
For further information for more information, check out the IRS's official announcement on this page.
