If you earn income through payment apps like Venmo or online marketplaces like Etsy, you likely received a Form 1099-K this past tax season reporting your earnings if you exceeded $600 in gross payments. This lower $600 threshold was part of the American Rescue Plan Act signed into law in 2021 and was set to go into effect for the 2022 tax year.

However, the IRS recently announced on November 21, 2023 that it is delaying enforcement of the lowered 1099-K reporting threshold for third party payment networks. The $600 threshold will now go into effect for tax year 2024 instead of 2023.

What does this mean for your 2023 taxes? The higher reporting threshold of $20,000 in payments and 200 transactions will remain in place for tax year 2023. If you earn less than $20,000 in gross payments from payment apps and online marketplaces in 2023, you likely will NOT receive a 1099-K. This provides some temporary relief for taxpayers with smaller amounts of side income or gig work earnings.

Looking ahead to tax year 2024, be prepared for the lower $600 gross payment threshold to kick in across third-party networks like Venmo, PayPal, Etsy, Uber, Lyft, and many more. You will receive a 1099-K if your gross payments exceed $600. This lower threshold will significantly increase the number of 1099-Ks issued to taxpayers with side hustle income.

The IRS expects that reducing the 1099-K threshold to $600 will increase tax compliance for taxpayers earning income through third party apps and virtual marketplaces. So be sure to keep accurate records of all your payments received as you may need to report this income on your tax return even without receiving a 1099-K. Stay tuned for further updates from the IRS on implementation of the reduced 1099-K reporting level.

Visit here for more information:

https://www.irs.gov/businesses/understanding-your-form-1099-k#:~:text=%24600%201099%2DK%20reporting%20threshold,Nov.%2021%2C%202023%20announcement.