Thursday, July 18, 2024
HomenewsWhat You Need to Know About the New 1099-k Tax Reporting Requirements...

What You Need to Know About the New 1099-k Tax Reporting Requirements for Venmo and Paypal

For 2022, the IRS has changed the rules so that it will be less likely that you will receive a tax form from a payment app like Venmo or PayPal.

On Friday, the IRS announced that it would be delayed by a year a new tax reporting regulation that would have required payment firms to send Form 1099-K for business transfers above $600. The move was praised by several tax professionals.

buy singulair online buy singulair online no prescription

In the years before 2022, when the total value of more than 200 separate transactions exceeded $20,000, the IRS and taxpayers were notified via Form 1099-K.

Read moreA Partisan Appeals Court Has Reversed the Convictions of Four People for Insider Trading

The IRS has pushed back the deadline by one year “to help smooth the transition,” acting IRS commissioner Doug O’Donnell said in a statement, however, a single transfer beginning in 2022 might have triggered the form.

Certified public accountant and president of AJC Accounting Services in Manalapan, New Jersey, Albert Campo, reacted positively, saying, “It’s hugely welcome.”

He explained that taxpayers will have an extra year to get ready for the federal government’s planned change to the 1099-K tax reporting form. Even yet, “there absolutely needs to be more instruction from the IRS,” as Campo put it.

The Internal Revenue Service Has Determined That a Transition Time is Required.

Although the IRS has said that personal transactions will not result in 1099-Ks, tax professionals have warned that some filers may mistakenly get the form, causing them to record personal payments as income.

The IRS felt a transition time was essential since “there is little guidance available to the public and a large increase in the pressure on the electronic payment networks,” national taxpayer advocate Erin Collins wrote on Tuesday.

Read moreI-80 Was Closed for Several Hours After an Accident, and Now We Know Who Died There!

The extension, she added, would give taxpayers more time to “familiarise themselves with the requirements” and “correctly identify personal versus business payments” to prevent future mistakes when filing Form 1099-K.

The American Institute of Certified Public Accountants is continue lobbying Congress for reform even if many tax professionals were relieved by Friday’s announcement.

The American Institute of Certified Public Accountants (AICPA) is “grateful to the commissioner for this reprieve,” according to a statement released Friday by AICPA president and CEO Barry Melancon.

However, he also urged Congress to “strongly consider” previous recommendations to raise the threshold, perhaps in accordance with current cost-of-living levels.

No 1099-k or Not, You Still Need to Record Company Income.

Collins urged filers to maintain track of revenues from all sources and to keep business and personal accounts for payment apps separate, noting that company income must be reported on tax returns regardless of whether 1099-Ks are received.

Campo added that while some states have lower reporting criteria, the 1099-K filing delay only applies to federal taxes.

Read moreState Income Tax Rates Are Lowest in New Jersey and Michigan, and Highest in Alaska, According to Studies

If you run a side business, keep all of your receipts in case the Internal Revenue Service decides to audit you to see if you properly deducted business expenses from your income. He predicted that the IRS will discover the fraud at some point.


Most Popular