NOTE: The IRS delayed its tax reporting rule Friday, so we’re providing this up to date column from February from Michelle Singletary’s archive.
A brand new revenue tax reporting rule that has been inflicting confusion for customers of varied fee apps will now be delayed by a 12 months, the IRS stated Friday.
Consequently, third-party fee processors akin to PayPal, Venmo and Money App is not going to be required to report transactions of $600 or extra on Kind 1099-Ok for the 2022 tax 12 months.
“The IRS and Treasury heard a lot of issues concerning the timeline of implementation of those adjustments beneath the American Rescue Plan,” performing IRS commissioner Doug O’Donnell stated in a press release. “The extra time will assist cut back confusion through the upcoming 2023 tax submitting season and supply extra time for taxpayers to arrange and perceive the brand new reporting necessities.”
For now, the prevailing 1099-Ok reporting threshold of $20,000 in funds from greater than 200 transactions will apply for 2022, the company stated.
Earlier than this announcement, the businesses have been purported to report funds obtained for items and companies of greater than $600 a 12 months. The change was made to seize revenue from gig staff and entrepreneurs with a aspect hustle. Prior to now, firms have been required to ship an IRS Kind 1099-Ok just for gross funds exceeding $20,000 and greater than 200 transactions inside a calendar 12 months.
Eric Bronnenkant, head of tax for on-line monetary adviser Betterment, answered some questions readers had earlier this 12 months in regards to the new rule, which now will apply to transactions made subsequent 12 months. Though the reporting has been delayed, it’s vital to grasp the way it will influence you for the 2024 tax season.