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IRS Delays 2023 Form 1099-K Threshold, Introduces $5,000 for 2024

In a recent announcement, the Internal Revenue Service (IRS) has decided to delay the implementation of the new $600 Form 1099-K reporting threshold for third-party payment organizations. The decision to treat 2023 as a transition year comes in response to feedback from taxpayers, tax professionals, and payment processors. The IRS is also planning a phased-in approach, with a $5,000 threshold set for 2024 to gradually implement the reporting requirements introduced under the American Rescue Plan.

What's Changing in 2023
The initial plan was to enforce a $600 reporting threshold for Form 1099-K in 2023. However, due to concerns about potential confusion and to address feedback from various stakeholders, the IRS has decided to delay the implementation. This means that for the tax year 2023, payment apps and online marketplaces will only be required to send Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions.

Phased-In Approach for 2024
To further ease the transition and address operational concerns, the IRS is introducing a phased-in approach. In 2024, the reporting threshold will be increased to $5,000. This gives the agency time to review and improve its processes, taking into account feedback and concerns raised by taxpayers and other stakeholders.

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