Why Has the New 1099-K Threshold Been Delayed?
Audio version available here:
Length: approx. 1 min. 20 sec.
Following the IRS’s announcement that it will be enforcing the new lower threshold for issuing 1099-Ks on third-party casual sale transactions in tax year 2023, confusion and outrage poured out from taxpayers.
Before 2023, the reporting threshold was more than 200 transactions totaling $20,000. The new rule, which had already been delayed once in 2022, changes it to $600 from just a single transaction, upon which third party apps like Venmo would have to issue a 1099-K to the money’s recipient. Since the new rule was delayed to the 2023 tax year, many Americans were caught off guard and demanded a walk-back.
Following the backlash, the IRS made the decision to delay the new threshold’s implementation once again. 2023 will now be treated as a transitional year with no change. 2024 is planned to begin phasing in the new rule by lowering the threshold from $20,000 to $5,000. Further IRS action will be based on taxpayer feedback on the new implementation schedule.
Following this move, your tax planning strategy may need adjustments. If you need the right guidance on your tax planning journey, or if you have not yet started, reach out to our experienced tax professionals at XQ CPA. We help our clients achieve the lowest possible tax liability–legally. We would love to help you on your tax planning journey, so call us today, or make an appointment online.
Phone: 832-295-3353
Online Booking: https://xqcpa-bookme.acuityscheduling.com/schedule.php
