New 1099-K Rules: What Taxpayers Need to Know

A change to 1099-K reporting is good news for IRS, taxpayers and business. The $600 reporting threshold for third-party settlement organizations is gone. In 2021, Congress passed a law requiring third-party settlement organizations, such as PayPal, Square and eBay, to send Form 1099-K to payees who are paid over $600 a year for goods and services. The rules first kicked in for 2023 1099-Ks, but IRS kept delaying them from taking effect. The OBBB repealed the 2021 change and restored the old rules. Third-party payment networks must send 1099-Ks to payees with over 200 transactions in a year who were paid more than $20,000. The Revenue Service has updated its FAQ on 1099-Ks to reflect the new change.

This 1099-K change doesn’t alter the taxation of the underlying transaction. Even if you don’t receive a 1099-K for money received through a website or app for selling goods or services, you’re still taxed on the gain or income and must report it on your income tax return. For example, if you sell concert tickets on StubHub for $1,600, that you paid $400 for, you’d report $1,200 of gain on your Form 1040.

Credit to Joy Taylor from Kiplinger.com