New Reporting Requirements for 1099-K
Article from CPA Practice Advisor
It used to be that receiving a Form 1099-K was relatively rare. The form, technically known as Form 1099-K Payment Card and Third-Party Network Transactions was used to report payments received from various third-party resources. Prior to 2022, the monetary threshold to receive a 1099-K was $20,000, with 200 sales-related transactions required. Both requirements had to be fulfilled in order to receive a 1099-K.
But thanks to a bill tucked inside the American Rescue Plan Act that was passed in 2021, anyone who sells more than $600 in merchandise with any number of transactions, even a single one, will be receiving the newly revised Form 1099-K.
If you’re a small business owner and receive the majority of customer payments from credit cards, cash, or checks, you’ll likely be unaffected. But if you use third party settlement organizations to get paid, the rules have changed. In 2022, companies such as Zelle, PayPal, Square, Stripe, Venmo, and others will be sending you a 1099-K if you receive more than $600 in payments during the year. Both Uber and Lyft are also considered third-party settlement organizations or use an organization to pay their workers, so if you had a few gigs with either, you’ll be receiving a 1099-K as well.
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Blog by Kim Storen, EA – Business Tax Manager
Learn more about Kim and the rest of the Storen Financial team here.