From Venmo, PayPal, Cash App, Zelle, Apple Pay, and the many others payment apps and online marketplaces a lot of people and businesses use, and the IRS has announced a phased approach to updating Form 1099-K reporting thresholds for these type of third-party settlement organizations (TPSOs). Here’s the quick breakdown:
- 2024: Transactions totaling over $5,000 will require reporting.
- 2025: The threshold lowers to $2,500.
- 2026 and beyond: Any amount over $600 must be reported.
Additionally, for 2024, the IRS won’t penalize TPSOs for not withholding backup taxes. However, if they do withhold, they must file Form 945 and provide Form 1099-K to the payee. Starting in 2025, penalties will apply for failing to withhold and pay these taxes.
For more details, check out the IRS announcement:
To further understand Form 1099-K and its implications, you might find this IRS webinar helpful:
