1099-Ks Will Reappear in This Filing Season

William Stromsem, CPA, J.D., George Washington University School of Business

 

Remember the problem with taxpayers bringing in Forms 1099-K to report income from third-party settlement networks like PayPal and the client having no business records of expenses to offset the reported revenue? Note that after suspending 1099-K reporting for 2022 and 2023, the IRS has set the dollar amount for 1099-Ks for 2024 (to be reported early in 2025) at $5,000. This is higher than the 2021 law, which required reporting of receipts of over $600, but the IRS is apparently prepared to implement the $5,000 requirement for 2024. 

 

This might be a good time to advise clients to be sure that expenses related to any reported revenue are supported so that they can take business deductions. The IRS has clarified that money taxpayers received from friends and family as a gift or repayment for a personal expense should not be reported on a Form 1099-K, as these payments are not taxable income.

 

Hopefully, you and your clients will be prepared for this upcoming filing season.   

 

About Form 1099-K, Payment Card and Third Party Network Transactions | Internal Revenue Service (irs.gov)

Understanding your Form 1099-K | Internal Revenue Service (irs.gov)