1099-K Reminder

The IRS delayed the effective date of this lower threshold. See our post on November 29, 2023.

As discussed in our post on January 24, 2023, the threshold for filing Form 1099-K, Payment Card and Third-Party Transactions, for the 2023 tax year will be significantly lower than in prior years.

For the 2023 tax year, third-party payment platforms will be required to file Form 1099-K for any account where total transactions exceed $600 for the year. In prior years, the form was required to be prepared only when an account had more than 200 transactions and more than $20,000 in total transactions during a tax year.

As a result of this change, many more clients will receive Forms 1099-K for the 2023 tax year, and practitioners will need to carefully report them on 2023 income tax returns.

In addition, practitioners should speak with clients about making sure that personal/non-business transactions are not included in a Form 1099-K for the 2023 tax year.

Clients who use PayPal, Venmo or similar accounts to transfer funds for personal purposes, such as reimbursing friends for shared meals or for gifts, must indicate that such transfers are NOT for goods and services. This needs to occur when they are making the transfers. Otherwise, such transfers will be included in a Form 1099-K sent to the recipient.

We will discuss strategies, logistics and reporting considerations for clients who receive Forms 1099-K in our upcoming seminars in December and January. If you are not already registered, register here