Date: April 21, 2021
If you receive payments electronically (think Paypal, CC, etc) your tax situation may be changing.
We just wanted to let you know that the IRS is planning to bring some important changes to the 1099-K filings.
Prior to this update, the IRS required each payment settlement entity (PSE) to send Form 1099-K to both the IRS and the recipient (or customer) if the PSE has processed payments amounting to at least $20,000 and at least 200 transactions per customer in the previous year. Historically, if you received your payments via Paypal or Stripe you only receive a 1099-K if you received more than $20,000.
However, the latest update lowers the 1099-K threshold amount from $20,000 to $600 and removes the transaction limit. That means that anyone receiving electronic payments by credit card, Paypal, Stripe, etc. will now receive a 1099-K reporting income received electronically if you made more than $600 throughout the year.
This law will become effective in 2022.
Learn How This Update Affects Your 2021 Filings
States that have already adopted the new threshold include:
- Vermont
- Massachusetts
- Virginia
- Maryland
If you have any questions or if we can help in any way, please feel free to book a call with me here.