This update is important and could potentially impact your business’s or clients’ filing requirements for the 2022 tax year.
Form 1099-K was updated earlier this year in accordance with the American Rescue Plan, these updates in reporting are now being delayed.
Keep reading for the latest updates on Form 1099-K for the 2022 tax year.
What is Form 1099-K?
Form 1099-K is used to report electronic payments from credit cards, debit cards, PayPal, Uber, Lyft, and more. The businesses that facilitate these payments are required to file Form 1099-K.
Payment Settlement Entities (PSEs), Third-party Settlement Organizations (TPSOs), and Merchant Acquiring Entities (MAEs) are all examples of the types of businesses that are required to file this form with the IRS. They are also required to provide a copy to the recipient of the payment, also referred to as the payee.
How did the American Rescue Plan Impact Form 1099-K?
The American Rescue Plan Act (ARP) introduced changes to this form for the 2022 tax year that were meant to increase the transparency of these types of transactions and the “gig economy” in general.
The ARP lowered the threshold for reporting these types of payments. This change would require these types of businesses to report a much larger percentage of the transactions they facilitate each year.
Are the Updates to Form 1099-K Delayed for Tax Year 2022?
Yes. The short answer is that businesses will not be required to adhere to the lower threshold. The new requirements will not be implemented for the 2022 tax year.
Initially, the threshold for the 2022 tax year was lowered:
PSEs and similar businesses would need to file a Form 1099-K to report any payment of $600 or more, regardless of how many transactions.
Now, the thresholds for the 2022 tax year will remain the same as the 2021 tax year.
PSEs and similar businesses will only be required to report payments exceeding $20,000 from over 200 transactions.
For more information, read the full IRS announcement here.
When will the Lower Threshold be Implemented?
At this time, the IRS has not provided a date when the lowered threshold will be implemented. However, they confirm that the original thresholds for Form 1099-K will remain in effect for businesses filing for the 2022 tax year.
What are the Form 1099-K Deadlines for Tax Year 2022?
Businesses that are required to file this form must distribute copies to their recipients by January 31, 2023.
The deadline to file paper copies of Form 1099-K is February 28, 2023.
The deadline to file electronically with the IRS is March 31, 2023.
Form 1099-K is Available from TaxBandits!
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