Yes. The IRS did delay the 1099-K reporting threshold and will be pushing it back a year. Payment networks will not be required to report payments over $600 to the IRS.
Instead, the standard tax reporting rule used in previous years will continue for one more year. The standard rule is $20,000 in sales and 200 transactions. The IRS is calling this year a transitioning, or interim, year.
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What is the tax threshold for getting a 1099-K in 2023?
In 2023, the tax threshold for getting a 1099-K tax form is $20,000 in sales and 200 transactions. If your side hustle or business generated more than $20,000 of sales in 2022 in addition to more than 200 transactions, you’ll likely be receiving a 1099-K form from the platform you’re using.
For example, if you’re a seller on eBay, Poshmark or Mercari and pass those thresholds, you will receive a 1099-K form. If you don’t pass those thresholds, you will not receive a tax form.
However, it’s important to remember you still need to report your extra income and pay taxes even if you don’t pass those thresholds. The IRS has hired additional agents for 2023 to watch for side hustlers and small businesses who don’t report their taxes.
in general, it’s best practice to remember all income needs to be reported to the IRS. If you’re a side hustler who needs help and you’re looking for easy deductions, check out this list of tax deductions for side hustles.
Who has to pay taxes on their extra income in 2023?
Anyone who made extra income in 2022 will need to pay taxes and report that income to the IRS in 2023.
Originally, the tax threshold was going to be $600 for 1099-K forms. This is no longer true. The IRS deemed 2023 as a transitional period.
No one is sure if the $600 reporting rule will begin the year after 2023, but it makes it a perfect year to practice saving receipts and tracking your income and expenses.
What does the IRS delay of 1099-K forms mean for side hustles?
For freelancers and side hustlers who already were reporting their income and paying taxes, the delay means nothing. For those who were not reporting their income, selling platforms like StockX won’t be reporting it to the IRS and sending 1099-K forms if you don’t pass the threshold.
Remember: Even if selling platforms don’t report your income, sellers and freelancers are still required to report income and pay taxes.
Does the 1099-K delay affect eBay sellers?
Yes. Anyone selling on any kind of platform, including eBay, will not have their income reported to the iRS if they don’t cross the $20,000 and 200 sales threshold.
How can I report and pay taxes on extra income and side hustles?
The easiest way to report and pay your taxes on extra income is by finding a good certified public accountant (CPA). They will be able to look over all your tax forms, receipts and income, find deductions and file your taxes.
It’s best to remember any income made needs to be reported to the IRS. Any side hustles or freelance gigs you’ve worked on should be reported and taxes need to be paid.
The IRS is watching smaller businesses and is prepared to audit them if necessary. No one wants to be audited. It’s not fun, can be more expensive than paying your taxes and will cause you to sleep poorly at night.