Below are some important updates from the IRS regarding Form 1099-K and its reporting requirements for the 2024 tax year.
1. Transactions and Form 1099-K:
If you sold goods or services in 2024 and received payments through certain payment apps, online marketplaces, or accepted payment cards, you may receive a third-party reporting document, Form 1099-K, Payment Card and Third Party Network Transactions.
2. Delay in Reporting Threshold:
The IRS has delayed the new federal law's $600 reporting threshold on Form 1099-K. The reporting requirements have been postponed for an additional year, and for 2024, the threshold will be $5,000 to allow for a phased implementation.
3. Taxable Income Clarification:
It is important to note that not all payments reported on Form 1099-K are taxable. Regardless of whether you receive a Form 1099-K, you must report all income, including payments received in cash, property, goods, digital assets, or from foreign sources or assets. Personal payments such as gifts and reimbursements should not be reported on Form 1099-K.
4. Review and Reporting:
Form 1099-K will show the gross amount of payments you received per app or marketplace. You should review this form to ensure the amounts are correct and determine any deductible expenses associated with these payments that you may be able to claim when filing your taxes.
5. Reporting Gains and Losses:
If you sold items at a loss, there is no tax liability. However, if you sold items at a gain, you will need to report that gain as income, which is taxable.
Should you have any questions or need further assistance regarding Form 1099-K or your tax obligations, please do not hesitate to reach out.
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