Tax season begins: New IRS tools aim to simplify filing
Tax season has officially begun, and the IRS started accepting returns on Monday.
Fox – 32 Chicago
If you’re a freelancer, business owner, or just have a small side hustle, you should know about the new tax requirement this year for electronic payments through Venmo, PayPal, online marketplaces and other third-party apps.
As part of former President Joe Biden’s attempt to ensure everyone pays their fair share of taxes, Congress lowered in 2021 the threshold for reporting income on payment apps from $20,000 and 200 transactions annually to $600 for a single transaction. Income at or above those thresholds would trigger a Form 1099-K, or report of payments you received for goods or services during the year.
The law was supposed to go into effect in 2022 but was delayed twice because financial firms complained it couldn’t get its systems ready to send people a 1099-K at that $600 threshold in time to comply. The IRS decided to phase in the changes, starting with a $5,000 annual threshold in 2024, $2,500 in 2025 and finally, $600 in 2026 and later.
With the reporting threshold dropping, more people than ever are expected to receive a 1099-K. Here are how the new reporting rules around 1099-Ks work.
What is a 1099-K and who sends them?
Form 1099-K is a report of payments you got for goods or services during the year from credit, debit or stored value cards such as gift cards or payment cards, and third-party payment apps or…
