The American Rescue Plan Act of 2021 enacted a new lower limit on 1099-K for 2022. The IRS announced it was delaying this change but it will be in affect for 2023.
Here is what you should know.
- The limit for 1099-K issuing is now set to $600 and no transactional limit. This is a huge change from the previous 200 transactions and more than $20,000.
- The 1099-K are required to be issued by the third party vendor.
- If you do not provide your EIN or SSN to the third party vendor they are required by law to withhold 24% of your payment for backup withholding. This will not be returned to you but you can report this on your tax return.
Who may receive a 1099-K? Anyone who….
- Received money from friends or family via payment applications which were not designated as personal
- Sold personal household items online
- Sold items related to a hobby
- Received payment for services provided
- Worked for an app-based vendor such as Uber or DoorDash
