New Form 1099-K Reporting Thresholds for 2024 Tax Year: What You Need to Know
If you receive 1099-K forms for payments you received in 2024, changes to the form are here. The American Rescue Plan Act of 2021 reduced the filing threshold for third-party settlement organization’s reporting obligations for form 1099-K to $600 per recipient. This was a significant change from the $20,000 or 200 transaction thresholds previously in effect. To help ease taxpayer burden, the IRS has delayed the new $600 form 1099-K reporting threshold until 2026 and announced a phase into the new filing threshold. For the 2024 reporting year, the dollar threshold for reportable informational returns will be $5,000. This will be phased down to $2,500 for the 2025 reporting year and finally to $600 for the 2026 filing year. So, if you received more than $5,000 in payments from an online source in 2024, you should expect to receive a 1099-K form from that source.
Changes to the reporting threshold might be an unwelcome wake up call to taxpayers who have not been tracking their online payments. If you sell goods or services through an online marketplace, be sure to monitor any 1099-K form received and appropriately report all income and expenses per IRS records.
1099-NEC and 1099-MISC reporting due January 31
On the flip side, if you are required to report on payments to vendors or subcontractors, we recommend you start early to prepare for forms 1099-NEC and 1099-MISC reporting. Beginning after January 1, 2024, informational returns must be electronically filed if more than 10 informational reporting forms are required. The submission deadline is January 31st, so it’s important to efficiently obtain vendor W-9s and transactional data. Penalties and interest will apply if informational reporting forms are not submitted on time. Additionally, be mindful of certain non-standard reporting environments and transactions. These include, but are not limited to, cost sharing arrangements and combined informational reporting options. Review the additional detail related to the transactions in question to determine the requirements for each specific case. We highly encourage adherence to the reporting obligations to minimize exposure to potential punitive action.
GRF CPAs & Advisors has a dedicated team of experienced professionals to assist with form 1099 reporting and compliance needs. Schedule time with our tax professionals to discuss your specific facts and circumstances.
