Update 12/4/24: The IRS recently released updated guidance indicating $2,500 as the 2025 threshold and $600 as the 2026 threshold. Updated below.
Original Post 11/21/23:
The IRS has announced a delay on implementation of the law requiring payment processing companies like Paypal report payments of $600+. The bureau will implement the rule with a three-prong approach:
- Year 2023: For year 2023 the IRS will delay making any changes. Companies can use the old formula and only send out a form 1099-K to someone who received $20,000 in payments AND had more than 200 transactions.
- Year 2024: The IRS will begin a phase-in of the new law and require payment processors to send a 1099-K tax form at a lower $5,000 threshold.
- Year 2025: The phase-in will continue with a $2,500 reporting threshold.
- Year 2026 and beyond: The law will be enforced at a $600 threshold.
Some important things to remember:
- This 1099-K reporting requirement does not affect whether you do or don’t owe taxes, it’s just an informational form.
- The 1099-K requirement is not only for big payment processing companies like Paypal. Even a shopping portal like Rakuten might be required, in some instances, to send a 1099-K.
- Use of direct payment services like Zelle should not cause you to get any tax form.
- Some states already have more strict requirements and people in those states have been getting the form 1099-K at lower amounts for many years. (Vermont, Maryland, Virginia, Massachusetts, Illinois, and others.)
- A business might elect to send a 1099-K at amounts lower than the IRS requirement. The discussion in this post is only what companies are federally mandated to do. A company might decide for their own reasons to issue a form 1099-K even at lower thresholds than the federal mandate. For example, eBay seems to be going with the federal mandates while Paypal seems to be going to $600 reporting already in 2024.
- Businesses should not count sending money to a friend (e.g. using Paypal’s ‘friends and family’ or similar Venmo payments). However, it’s difficult to know for certain that companies will compute everything properly.
Related Posts:
- Stimulus Bill Requires Payment Processors & Businesses To Report Earnings of $600+ on 1099-K Tax Form (e.g. Paypal, Portals, eBay, Uber)
- About That 1099-K From Paypal
- PayPal Quietly Toughens Their 1099-K Issuance Policy
I got a 1099K from PayPal for a security deposit last year. Well, whatever. I’ll expense it this year.
It really shouldn’t be income. It’s not *my* money. It’s money that gets returned
Oh no, your friends venmo’ed you some money to cover a flight? Or, oh no you sold some of your old junk on ebay? Heres your 1099, the IRS expects its pound of flesh now.
Fk the IRS, the US government and people who support stealing from others.
Sold old junk on ebay? Deduct the depreciated cost. No tax due unless you made a profit.
Friend sent money to cover a flight? Was it a deductible expense for your friend? Was it a gift? If no to both, you owe no tax. If a gift, there’s no tax on the first $18000.
The rules are ridiculous but the IRS has little choice. Congress made the mess and congress could easily fix it. Tell it to your representative and senators.
Presumably most voters like it just the way it is because they keep re-electing the incumbents responsible.
Ugh. If you had bothered to actually research this, you’d learn that this law was passed in March 2021 when the Democrats controlled the White House and both houses of Congress. And if my math is correct … I would say that most voters don’t like it the way it is because they actually just rejected the party/incumbents responsible.
Your math is not correct. The great majority of incumbents who ran got re-elected, just like they do every time.
Congress enacted the Revenue Act in 1913 and for the last century every new congress has added complexity. The voters reward them for this. If you think it began with with one minor tweak in 2021 you are misinformed.
If, as you say, “most voters don’t like the way it is” then most voters must be very confused. Otherwise it would not be the way it is.
That’s an impressive stretch you just made there, Mr. Armstrong. You went from talking about the “ridiculous” rules of one specific tax policy which could “easily” be fixed in your first post to the entire Income Tax code in your second. Unfortunately for you, that spin doesn’t fly and math doesn’t lie.
The 2024 election was literally a repudiation of the policies enacted by the party in power for the last 4 years. The 2021 bill in question which created this policy – and also a very predictable inflationary tsunami, by the way – was one the biggest reasons why the Democrats were swept out. If you want to continue living with your head in the sand and pretend this election won’t result in major changes – including a reversal of that “minor tweak” in tax policy – then I really can’t help you.
The 2024 election was largely decided by the price of avocados at your local grocer. Prove me wrong
Bank Account Bryan .
That is why I also said fk the US government
Also, fk roads and bridges, air traffic controllers, the occasional food inspection, National Weather Service, Corps of Engineers, CBP, NIH, and so on… ‘cuz guvmint iz teh bad.
I agree. Fk all government roads and bridges, air traffic controllers, the occasional food inspection, National Weather Service, Corps of Engineers, CBP, NIH, and so on.
If government nationalized shoe manufacturing you’d be screaming from the roof top that if you hate the government you hate shoes and without government people would have no shoes.
Real edgelord stuff, there. Maybe you should move to rural Montana and write a book.
Maybe you should stop being a coward and start robbing random people instead of simping for others doing it from the sidelines. Heck, you can throw a half eaten sandwich in your victims fridge to avoid accountability and declare you did not rob anyone, you provided them with a service! Beside, without you how would they get food?
Do you need help?
Marvin Heemeyer would be proud
Keep up the good fight
Free Luigi!
If you are so unhappy with the US’ policies, why not move to some other country?
Great idea. You should have said the same thing to the founding fathers. You should have told George Washington if he does not like British policies, why not move to some other country?
It’s very rational of you to compare yourself to George Washington!
You can educate him on the merits on your philosophy of rolling over for your abusers and abandoning your homes for them.
The 2025 Tony Award nominations will be announced on May 1, 2025. I’m rooting for you.
Govt/ACA bad!, UHC good!, amirite
killdozer ? Are you pouring one out for Brian Thompson? gtfo, retard
…especially the NIH
Yaaas anarchy! And then we shall build our own roads and bridges and all the good things. And to keep it functioning we shall collect offerings from the civs, NOT a tax. And sen~ior dildozer will organize the anarchists and no IRS will get in the way of our glory. Praise be upon our savior!
Didn’t Houston just raise property taxes AGAIN, another 10% across the board, in addition all of the other rate increases and the near 80% increase in property valuations over the last 3 years? Yeah. Okay. /s Enjoy all of those totally functioning and existent services. /s
Personally, I like the videos of the broken water mains. It is worth all of the extra tax increases…even though the water lines are still broken. Yall want to keep paying for this tragic comedy, be my guest. I got my popcorn.
https://www.click2houston.com/news/local/2024/05/31/thats-classic-public-corruption-felony-charges-after-drained-investigation-into-shady-contracts/
I live in Houston and have taxable properties. While valuations go up, the rate goes down since the taxing entity levies an amount which isn’t significantly changed. Roughly speaking, valuation went up 20%, rates went down 20%. My total taxes paid in the last 3 years has actually gone down each year in Houston.
We can agree valuations have gone up significantly (especially appraised values). But, uh, generally speaking, the rates have not gone down.
https://houstondaily.com/stories/664704014-opinion-harris-county-has-raised-property-taxes-by-nearly-30-in-the-last-two-years
Also, small businesses are shouldered with the bulk of that tax burden as there are no exemptions or abatements (generally speaking) for small businesses.
But…okay. Like I said, if you want that, I got muh popcorn and am enjoying the show.
You’re thinking too small picture broski… Houston is but the first layer of Coruscant. Need a good layer of crushed rubble to build on. Once the seas are capped with plastic and we contain the nuke deserts, we start building the skytowers.
Your children’s children will not remember your nominal tax rate.
I’m just curious, do you talk the same way in “real” life as you do online?
Lol, no. I’m pretty much a mild mannered lab nerd. Tis but a caricature of a caricature for the amusement of friend and foe.
Yourself? Are you really a robot named Eric?
Wow, that’s an extremely rude comment. I have no plans on conversing with you going forward.
BTW, if you are planning on later claiming it was “obviously a joke”, like your buddy likes to say, save it.
You don’t think your avatar of a robot had anything to do with the comment?
You probably think that this comment wasn’t meant as an insult also: #1959488 .
BTW, the reason why I didn’t respond to that comment, which was actually even meaner than what
carlzjr wrote, is because I have never conversed with that person before (to my knowledge) so what they wrote didn’t bother me at all.
I don’t know if it was a joke but seemed a natural observation based on your avatar.
Wow, of course that wasn’t a joke by
cjb! Even if it was meant as a joke, it was an extremely mean joke, which is just as bad (or even worse) than if it wasn’t a joke at all.
It’s kind of like the deplorable reply to your comment in the Wings post that someone else made (regarding torturing me) when you questioned me about my DP scavenger hunt, indirectly starting a brouhaha.
What that person failed to realize is that by later claiming that it was “obviously a joke” didn’t make it better at all. Some things just should not be joked about!
Most people don’t seem to get my sense of humor on here which is okay but have you noticed that people are rarely, if ever, offended by something that I have written? That’s because my humor is not mean-spirited!
In the few times that I have accidentally offended someone, I apologized to them.
Anyway, I’ve noticed that on many occasions that you have interjected yourself into replies that I’ve made to others (like you did here). The vast majority of the time, your speculation ends up being wrong.
I could be wrong, but I don’t recall you ever jumping in to give me the benefit of the doubt. It always seems to be that you are giving the other person the benefit of the doubt (like you did here).
No offense, but I have decided to take back the apology that I made to you in the Paramount+ post that you completely ignored.
Good day to you, sir or ma’am.
Didn’t know I started a brouhaha but not invested enough to go search. I only mentioned the avatar to head off what seemed harmless. But hey, if you wanted to assume it was an insult, that’s fine. Best of luck.
Holy shit, this is pathetic. Grow a thicker skin, stop letting internet commenters live rent-free in your head for so long, and for Christ’s sake quit fucking tagging me in your inane sperg-outs. Or, as the kids say these days, “go touch grass”.
Eh? Asking a question here with some humor. My apologies if you took that too personally.
I will continue my line of questioning: So you are not a cloud of artificial neurons correct? And you do something in the tangible land of the living? What do you manipulate with yon manipulators in exchange for currency? I’m into pipettes and microplates and nanodrops myself.
Does anyone know, if you file Married Jointly is the threshold $600 per person or per married couple? Like if I had $400 of payments from eBay or PayPal or whatever and my wife had $400 also, would it hit the $600 threshold and generate a 1099-K?
It’s per person. How would they know your marital status?
For people below who are saying things like “people should be paying their tax anyway”, yes most people know this and would not mind if 1099-Ks accurately reported taxable income. The issue is that platforms like PayPal often miscategorize things as income and do not factor in things like cost-basis. So please get off your high horse chastising others for something that you either personally do not understand the implications of and/or does not affect you. The primary concern people are voicing here is 1099-Ks making the IRS expect taxes to be payed on non-taxable funds.
very well said
These things are a nothing burger. Everyone should be reporting their income no matter its <600 or >20000 per year as the tax law is clear. These limits and handwringing about 1099k forms are just convenient excuses for people to ‘forget’ to report minor income streams.
Yeah, yeah, we should all report those cash backs, FAR Ibotta/aisle/whatever and everything else, right? Even if it’s not taxable since we already spent more money on the product, let’s just waste our time.
Correct me if I’m wrong, but cash back from apps like Ibotta has never been considered as taxable income I didn’t think. It’s equivalent to credit card cash back points, which the IRS views as coupons/rebates, not income. These companies haven’t been talking about needing to send out 1099-K as well have they?
You are correct.
Andy (likely purposely) conflated 2 different things.
If they make payments through Paypal, like Rakuten does, they will likely generate 1099-k’s regardless of what the cashback companies intend or communicate.
Rakuten allows a check option. That’s your own fault if you choose PP when a check option exists.
Only if you trust PayPal (or other intermediary) to not screw up the paper work. What if they categorize rebates and cash back as taxable? The burden will be on you to a) get the forms corrected at the source, and / or b) prove there was no profit in those payments.
Hours of frustration and fun for all. A total waste of time.
Second part of the comment was meant for people like you https://www.doctorofcredit.com/irs-announces-delay-on-new-600-form-1099-k-rule-2023-2024-2025-details/#comment-1964968
> the tax law is clear
very much not.
If it was, we wouldn’t be talking about this, and an entire industry of lawyers, accountants and other vultures wouldn’t exist.
The system is in fact so complex and intentionally (for various reasons) convoluted, designed so that it is open to interpretation and depending on how far you are willing to play the game, you won’t pay the same taxes as your neighbor who makes the same as you.
The entire system is very unfair because it punishes the people don’t try to optimize.
I’ll sell old, used electronics and other personal items of mine on eBay. Essentially all the time these items are sold for (much) less than I originally purchased them years earlier. It’s not a business (if it was I’d be going broke doing it) and I’m not earning any taxable income. But now it’s assumed I am and the burden of proof is on me to hunt down original receipts and potentially have to prove it’s not taxable income to the IRS. Just frustrating in my opinion, the fact that they continue to kick the can down the road and not enforce the $600 reporting threshold just shows how poorly thought out the law was. It’s too low and is going to include a lot of casual sellers which wastes everyone’s time.
+1
Over the last couple of years through 2024 I’ve been drastically downsizing my possessions selling on eBay and Craigslist. Loads of old video games, tech, and household items like bundles of interesting magazines and gifts from Grandma never opened.
Where am I going to locate a receipt for a pristine grade A copy of the NES The Legend of Zelda? Search the attic for a faded 1987 paper copy receipt from Target? It’s a ton of work on 100 sales to prove, when usually not possible, that I didn’t truthfully make $3,000 on $3,500 sales – listing expenses and shipping.
Jon just wants you to fund government fraud, waste, and abuse with your tax dollars.
@Jon — Awesome what’s your address. We can have the IRS investigate you first. Hope you didn’t forget to report the $20 you brother lent you that you forgot to pay back as income.
These forms though could potentially lead to unnecessary audits and potential initial overcharges from the IRS if the amounts in the 1099-K do not represent actual “income.”
Which bonuses were 1099-k
Has nothing to do with bonuses. It’s for payment apps / sales platform activity that could be business activity. It’s so people have to report business income essentially. It’s probably not applicable to you.
Except its any payment, including things like Rakuten cashback through Paypal. Lots of explicitly non-taxable stuff that it will now be on you to retain documentation of to prove its non-taxability. Its probably applicable to lots of people with no business activity at all.
I say, let the $600 limit hit.
…everyone will be pissed, even the people who voted them in and those originally pushing for the $600 threshold.
Let them eat cake 😂
sorry, that’s not how it works.
Sounds like someone has got buyer’s remorse after all of these beauracrats implemented the crazy policies they said they were going to do. 😭😂 lol
20K to 2500, and 600 is soon to come.
Let them eat cake 😂
Only good thing about the incoming administration is that they’ll probably roll this back.
“only”. lol
does your last name start with a “b”?
upvoted by 12 family members, no less
That’s not how it works Tarzan, maybe there are people who think different than your two.
Lololo
I am going to be laughing at the absolute dumpster fire the trump train will be once again these next 4 years. It was hilarious waking up every day to see what new dumb shit mess these clowns had gotten into.
I’m waiting for the Epstein and Diddy’s lists. Are you?
Don’t forget the pee-pee tape!
Which tape are you referring to?
BTW, did you see Trump’s interview with Rogan that happened before the election? He claimed that he will release files on the JFK assassination as soon as he becomes President again. I think he also mentioned releasing info on Area 51. Do you believe that he will actually do it?
https://www.youtube.com/watch?v=Lk1uBMZOaXc
No, I didn’t see that..
I couldn’t bear to watch that video as I can’t stand that “comedian”.
BTW, the comment that you replied to went to moderation. Do you think that the T word is now considered “persona not grata” by the moderation system?
Virginia has a MAGA governor and he hasn’t rolled back the state version of this.
ebay appears to have updated their thresholds: https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794
“This is based on when gross funds are processed to eBay, not necessarily when funds are received by sellers. This amount does not include any adjustments, for example, credits, discounts, fees, refunds, or any other adjustable amounts. However, sales tax and canceled transactions are excluded from the gross amount reported.”
So total list price the item was sold. Refunds are going to eat away the limit as well. Anybody know how to lookup total YTD gross on ebay? I am just a small seller that sells used goods but I am almost 5k.
This link should get you to your gross and net sales, it does include taxes though.
https://www.ebay.com/sh/performance/sales?referencePeriodFilter=THIS_YEAR&benchmarkPeriodFilter=LAST_YEAR&benchmarkStart=1672560000000
The eBay reporting has gotten a lot better over the years where it’s really easy to get your sales, shipping costs to do the taxes. Still painful but better than it used to be.
I’ll add that
It seems that PayPal might still use the $600 threshold for 2024: https://www.paypal.com/us/cshelp/article/will-paypal-report-my-sales-to-the-irs-help543
I’ll add that link
Paypal updated their 1099-k policy to reflect the new IRS guidance.