New Form 1099-K Threshold for the 2023 Tax Year
Updated on November 23, 2023 - 15.00 AM by Admin, TaxBandits
In a recent announcement in November 2023, the IRS announced a delay in implementing the new reporting threshold of $600 for Form 1099-K. This means, payment apps and online marketplaces will now only send out Forms 1099-K to taxpayers who receive over $20,000 and have more than 200 transactions in the tax year. Looking ahead to the tax year 2024, the IRS is gearing up for another change, planning to introduce a threshold of $5,000 as part of a phased approach to reporting requirements.
In this article, we will discuss the details of the Form 1099-K threshold change for the 2023 tax year, providing you with a comprehensive understanding of how it may affect you or your business.
1. Overview of the Form 1099-K
The IRS Form 1099-K is used by the payment settlement entities to report the gross amount of payment transactions made under the following conditions
- If you receive payments through Payment cards such as Debit cards, Credit cards, or stored value cards (gift cards).
- If you receive a payment of $20,000 with 200 transactions through Third-party networks such as Payment apps (PayPal, Venmo, Cash app, etc.) or the marketplace.
2. The new 1099-K reporting threshold for the 2023 tax year
To enhance accessibility and transparency in digital payment tax reporting, the IRS has lowered the reporting threshold for Form 1099-K for the 2023 tax year from $20,000 and 200 transactions to $600, regardless of transaction limits.
While the lowered threshold aims to improve reporting accuracy, the significant reduction to $600 may pose challenges for taxpayers. Many individuals who were previously not obligated to file may now find themselves receiving a 1099-K for nontaxable income. This shift prompts a potential source of confusion for taxpayers.
To address these concerns and ensure a smoother transition, the IRS has opted to delay the full implementation of the $600 threshold. Consequently, the 2023 tax year serves as an additional transition period. During this time, reporting will not be mandatory unless a taxpayer receives over $20,000 and conducts more than 200 transactions.
3. What are the state filing requirements for 1099-K?
State filing requirements for Form 1099-K can vary from the federal filing requirements. It's essential to be aware of these differences to ensure compliance with state tax regulations.
State reporting requirements can change from year to year, and for the year 2023, some states haven’t released their updated reporting requirements yet. This section will be updated once the state authorities release their reporting requirements for 2023, ensuring that you have the most current information to fulfill your tax obligations accurately and in compliance with state regulations.
Here are the state filing requirements for Form 1099-K for 2022.
| State | Filing requirement | Threshold |
|---|---|---|
| Arizona | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| Arkansas | CF/SF | $2,500 and 0 transaction |
| Colorado | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| District of Columbia | Direct State filing | $600 and 0 transaction |
| Georgia | If State Withholding | Form 1099-K should be reported regardless of the filing threshold. |
| Idaho | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| Illinois | Direct State filing | $1,000 and 4 transactions |
| Indiana | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| Iowa | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| Kansas | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| Kentucky | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| Louisiana | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| Maryland | CF/SF | $600 and 0 transaction |
| Massachusetts | Direct State filing | $600 and 0 transaction |
| Minnesota | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| New Jersey | CF/SF | $1,000 and 0 transaction |
| Rhode Island | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| South Carolina | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| Utah | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| Vermont | Direct State filing | $600 and 0 transaction |
| Virginia | Direct State filing | $600 and 0 transaction |
| West Virginia | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
| Wisconsin | If State Withholding | Form 1099-K should be reported regardless of the $600 filing threshold. |
4. When is the Deadline to file Form 1099-K for the 2023 tax year?
Like other 1099 forms, the 1099-K follows the same deadline. Here is the Form 1099-K deadline for the 2023 tax year.
| Recipient copy Deadline | January 31, 2024 |
| Paper filing Deadline | February 28, 2024 |
| E-filing Deadline | April 01, 2024 |
While many states share the same deadline as the IRS for 1099-K reporting, there are exceptions. Learn more about state-specific filing requirements for 1099-K.
5. Automate 1099-K Using TaxBandits API!
With the new lowered threshold, the number of 1099-K that you need to file will increase. To manage that, you can integrate TaxBandits API with your software to automate 1099-K Forms. Learn More
6. How to file Form 1099-K for 2023?
E-filing is the easiest way to report 1099-K payments to the IRS. Filing paper forms is a longer and less efficient process. Plus, if you are required to file more than 10 tax Forms with the IRS, your business is required to e-file regardless. TaxBandits helps you e-file Form 1099-K in just a few simple steps.
- Enter the Form information
- Review the Form information
- Transmit the form to the IRS and state
- Send recipient/payee copies through postal mailing or online access.
Why wait? Get started with TaxBandits today to e-file Form 1099-K and get the filing status in minutes. Pricing starts at $0.80/Form.
Helpful Resource for Form 1099-K
