The IRS has recently updated the Form 1099-K guidelines. Here’s what you need to know about how this will affect your online transactions and beyond. 1099-K Changes & How They Affect Everyone Much of the conversation that has been circulating about the new 1099-K thresholds for third-party and online transactions has focused on the impact on the smallest of small businesses. Previously, side hustles and other micro-business ventures were not getting anywhere close to the old $20,000-and-200-transaction minimum used to determine who got these forms and who didn’t. As we’ve mentioned before, the threshold is now set at just $600 – so if any third-party or online transaction (related to business, not personal exchanges) totals reach more than that, the recipient of those funds will need to also get a 1099-K to file with their taxes. These new thresholds are going to generate a tidal wave of new 1099-K filings come tax season 2023. While personal payments don’t count towards these thresholds, we can expect some issues to arise, as freelancers, entrepreneurs, friends, family, and corporate accounts are all coalescing within these apps to pay for everything from your portion of the brunch bill to a company retreat or contractor fees. Who Is Responsible for Filing 1099-K? There is also a bit of confusion about which entities and individuals will have to prepare and file all of these new 1099-K forms. You can rest a little easier knowing that your business (or your personal tax preparer) isn’t responsible for generating these forms. The entities that facilitated the online transactions (or third-party settlement organizations like Venmo, Paypal, etc.) are the ones who must send them to the payee, which is the business or individual that received the funds. Because this is going to be a new and greatly expanded process for these entities, it’s even more important that you and your accounting or tax professionals look over these forms carefully. There …
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