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Thursday, April 18, 2024

IRS delays tax reporting rule change for business payments on apps such as Venmo and PayPal

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The $600 threshold will go into effect for tax year 2025, and taxpayers over the limit can expect to receive a 1099-K at the beginning of 2026.

However, business payments have always been taxable and filers should still report 2023 income even if they don’t receive a Form 1099-K.

“We spent many months gathering feedback from third-party groups and others, and it became increasingly clear we need additional time to effectively implement the new reporting requirements,” IRS Commissioner Danny Werfel said in a statement.

The agency said it also plans on updates for Form 1040, which is used by taxpayers to file individual income tax returns, and related schedules, to “make the reporting process easier.”

“Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion as we continue to look at changes to the Form 1040,” Werfel said. “It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area.”

The announcement comes amid bipartisan scrutiny of the reporting requirement, with lawmakers and industry professionals citing concerns about taxpayer confusion. Prior to the delay, the IRS was expecting an estimated 44 million 1099-Ks for 2023.

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Chris Washington
Chris Washingtonhttps://whnynews.com
Chris Washington brings over 25 years of experience in financial journalism to WHNY News. A Schenectady native, Chris has a keen eye for business trends impacting upstate New York. His insightful reporting has earned him numerous accolades. Chris holds a degree in Economics from Syracuse University.
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