The anniversary of 9/11 always reminds me that our lives can be changed dramatically in the span of a day. We could not have imagined on September 10 that such tragedy would strike or that so many people’s lives would be changed. It’s one of the reasons it’s so helpful to us as a nation to carve out time to remember what happened.
Now, I’d like to visit some recent decisions of our governing body on your tax situation — something I talk about regularly. It can be hard as a taxpayer to fall under the weight of new tax laws. They have a lot of impact. And the past few years have seen a bevy of them. Some simple and in your favor, but some more complicated (as many tax decisions are).
One of those: the lowering of the reporting requirement for payment networks (PayPal, Venmo, etc.). There’s been a lot of talk about this change since it passed in 2021, but many don’t realize that it wasn’t effective until this tax year (2023). The 2024 filing season will see lots of confusion and questions about 1099-K’s by people all across the country, so I want to clear up the murky waters here.
Though there are some in Washington calling for the threshold to be raised, I’d like to make sure you’re prepared no matter the outcome of that.
1099-K Reporting Requirements: Clearing Up Confusion for El Paso Taxpayers
“Count the day won when, turning on its axis, this earth imposes no additional taxes.” – Franklin P. Adams
You’ve been hearing about the changes to the reporting requirements for 3rd party vendors like Venmo and PayPal for a while now. Thanks to the 2021’s American Rescue Plan, the reporting threshold dropped from 20k for 200 transactions to 600 dollars (for even a single transaction).
It was initially set to roll out for reporting on 2022 taxes, but, thanks to an overworked IRS, the government decided to push back the enforcement to the 2023 tax year… yes, that’s this year’s taxes (due in 2024).
Like a lot of other Ciudad Ju‡rez people, you likely use those apps for personal reasons like sending some quick cash to friends for a shared meal or receiving payment for grandma’s antique hutch you decided to get rid of.
So, you’re probably wondering if you’ll see a Form 1099-K in your mailbox this year. It’s certainly possible but not necessarily a sign that you owe the government for a non-business transaction.
Here’s what’s important to know: You might receive one without owing any taxes on the reported income. This is because the payment network is obligated to do so for transactions above the 600 dollar mark (they’re covering their bases). Just because you get a 1099-K doesn’t automatically mean that the income is taxable.
Categories: Economic History
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